Rupee Falls 3 Paise to 95.97 Against USD Amid Strong Dollar Demand

The Indian rupee traded in a narrow range on Wednesday morning, falling by 3 paise to 95.97 against the US dollar. The pressure on the USD/INR pair came from persistent dollar demand from state-run oil marketing companies and firm crude oil prices.

Dollar sales by state-run banks on behalf of the Reserve Bank of India in both spot and forward markets are limiting the rupee's potential to break above the 96.00 level. Additionally, foreign portfolio outflows of around $2.2 billion this month and firm US yields are keeping the pressure on.

According to Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, 'The Reserve Bank has been an active presence -- dealers report state-run bank dollar sales, and the $14.9 billion fall in reserves to $766 billion in the latest week is consistent with sizeable intervention -- while portfolio outflows of around $2.2 billion this month and firm US yields keep the pressure on.'