Rupee falls 4 paise to 96.39 against US dollar in early trade

New Delhi/Mumbai: The rupee declined 4 paise to 96.39 against the US dollar in early trade on Tuesday, pressured by rising crude oil prices and sustained foreign investor outflows.

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However, positive sentiment in domestic equity markets and a weaker dollar index helped cushion the local currency against a sharper decline, forex traders said.

At the interbank foreign exchange market, the rupee opened at 96.29 against the US dollar before slipping to 96.39, down 4 paise from its previous close.

The rupee had depreciated 10 paise to close at 96.35 against the US dollar on Monday.

“The Reserve Bank has been protecting the rupee from its fall at 96.33 but the demand of dollar from FPIs and oil companies has not come down despite oil falling to USD 100.63 per barrel and dollar index to 102.12,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

The Reserve Bank of India’s Monetary Policy Committee began its three-day meeting on Monday and is expected to raise the policy rate by 25 basis points, in line with a hawkish stance adopted by central banks amid the escalating conflict in West Asia and the risks it poses to domestic inflation.

The last repo rate hike was in February 2023, when the RBI raised the rate by 25 basis points to 6.50 percent. The central bank kept the rate unchanged through 2023-24 before beginning its rate-cut cycle in 2025. The policy repo rate currently stands at 5.25 per cent.

Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six major currencies, was trading 0.04 percent lower at 102.12.

Brent crude, the global oil benchmark, was trading 0.23 percent higher at USD 100.60 per barrel in futures trade.

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On the domestic equity market, the Sensex advanced 120.22 points to 72,535.41 in early trade, while the Nifty gained 47.15 points to 22,603.10.

Foreign Institutional Investors (FIIs) remained net sellers in the equity market, offloading shares worth Rs 4,699.14 crore on Monday, according to exchange data.

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