The rupee declined by 8 paise to 85.70 against the US dollar in early trade on Thursday, weighed down by renewed global risk aversion and ongoing foreign fund outflows.
Forex traders noted that the currency is moving within a narrow band, largely due to the Reserve Bank of India’s cautious stance. Any decline in the USD-INR rate is expected to prompt dollar purchases by the RBI, aimed at managing upcoming maturities and replenishing its intervention reserves.
This consistent dollar demand from the central bank is restricting the rupee’s potential to appreciate, they added.