Rupee trades in narrow range against US dollar in early trade

The Indian rupee traded within a tight range and slipped 3 paise to 95.97 against the US dollar during early trading on Wednesday. Persistent demand for dollars from state-run oil marketing companies and high crude oil prices contributed to the downward pressure. Dollar sales by state-run banks on behalf of the Reserve Bank of India in both spot and forward markets also helped keep the USD/INR pair under 96.00.

Foreign portfolio outflows of approximately $2.2 billion this month, combined with strong US yields, further weighed on the currency. At the interbank foreign exchange market, the rupee began at 95.87 and dropped to 95.97, marking a 3 paise decline from its prior closing price. On Tuesday, the rupee ended slightly higher at 95.94, just above the critical 96 per dollar threshold.

The Reserve Bank of India has been actively intervening, with reports of state-run bank dollar sales and a $14.9 billion decline in reserves to $766 billion in the previous week. Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, rose to 101.40, up 0.04 percent. Brent crude, the global oil benchmark, gained 0.82 percent to $103.43 per barrel.

Domestic equities performed well, with the Sensex up 190 points to 72,733.04 and the Nifty climbing 22 points to 22,735.20. Foreign Institutional Investors (FIIs) netted a sell-off of equities worth ₹9,980.22 crore on Tuesday, according to exchange data.