India rupee holds near 96 per dollar as outflows weigh, RBI intervention supports

The Indian rupee was little changed near 96 per dollar on Wednesday, with foreign portfolio outflows and dollar demand weighing on the currency, while Reserve Bank of India intervention offered support. m. 98 in the previous session. 3% quarterly fall.

State-run banks sold dollars after the local spot market opened, traders said, as in the past two weeks. Persistent RBI intervention and use of the central bank's larger foreign exchange reserves have helped support the rupee against elevated oil prices, surging global bond yields and foreign selling of Indian stocks. 04 billion) on Tuesday on a net basis, the biggest outflow in about four months. That pressure, together with routine dollar demand, outweighed support from slightly lower oil prices and a pullback in bets on near-term Federal Reserve rate increases.

New York Fed President John Williams said on Tuesday policymakers probably need to deliver one more rate hike this year to get inflation back on track. Markets had priced about 50 basis points of rate increases before his remarks. Since then, the odds of an October hike have eased to just under 50%, while signs of improving energy supply from the Middle East have helped cool oil prices even though they stayed above $100 per barrel. MUFG said in a note that sustained relief from US rate and dollar pressure will require not only more evidence of labour-market moderation, but also clearer signs that inflation is easing.

Attention now turns to US personal consumption expenditure inflation data and remarks from Fed policymakers.