New Delhi: Rupee traded in a narrow range and fell 3 paise to 95.97 against the US dollar in early trade on Thursday, constrained by ongoing dollar demand from state-run oil companies.
However, RBI-backed dollar sales across spot and forward markets continue to cap losses, keeping the exchange rate below the 96.00 threshold.
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Additionally, sustained foreign portfolio outflows and firm US yields are keeping pressure on the USD/INR pair.
At the interbank foreign exchange market, the rupee opened at 95.95, then fell to 95.97 against the US dollar, registering a fall of 3 paise from its previous close.
On Wednesday, the rupee pared gains to settle flat at 95.94 against the US dollar.
"Aggressive foreign exchange intervention by the Reserve Bank of India (RBI)-acting through state-run banks to supply dollars in both the spot and forward markets-served as the primary market defender, preventing spot rates from breaking past the key 96.00 boundary," said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.
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Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 101.54, higher by 0.09 per cent.
"The dollar index is at a two-month high near 101.5, up almost 2 per cent in September and within sight of its 52-week high near 101.8," Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities said, adding that a firm dollar is a headwind for gold, silver and emerging market currencies, including the rupee.
Brent crude, the global oil benchmark, was trading lower by 1.18 per cent at USD 96.87 per barrel in futures trade.
On the domestic equity market front, Sensex declined 215 points to 72,257.30 in early trade, while the Nifty was down 107.25 points to 22,518.90.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 10,148.41 crore on a net basis on Wednesday, according to exchange data.
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