The rupee fell 6 paise to 94.69 against the US dollar in early trade on Tuesday as the greenback strengthened further to near 13-month high.
Forex traders said FII outflows and a weak start to morning trade in domestic equity markets added pressure on the rupee, while crude oil prices softened against a sharp fall.
At the interbank foreign exchange, the rupee opened at 94.73 against the US dollar and then touched 94.69, 6 paise lower than its previous close.
On Monday, the rupee fell 30 paise to close at 94.63 against the US dollar.
Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said, “Rising expectations of a Federal Reserve rate hike and broad-based dollar strength weighed on Asian currencies, leading to the rupee opening weak against the US dollar. The greenback hit 13-month high on optimism over US-Iran peace talks and weakness in major currencies, especially the British pound and the Japanese yen.”
“While decline in crude oil prices may provide some support to the rupee amid progress in US-Iran talks, gains are likely to be limited due to Fed’s dovish stance and high inflation outlook. Meanwhile, India’s infrastructure output growth slowed to 0.5 per cent in May, indicating moderation in economic activity,” Yadav said.
“The rupee will remain in the range of 94.20 to 94.90 during the day with increased selling in the dollar,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02 percent up at 101.04 amid a dovish Fed stance and the fragile US-Iran trade deal.
Global oil benchmark Brent crude was trading 0.46 per cent lower at US$77.54 per barrel in futures trade.
On the domestic equity market front, Sensex was down 57.43 points at 77,061.94 in early trade, while Nifty was down 31.6 points at 24,071.30.
Foreign institutional investors became net sellers and sold their equities ₹Rs 635.91 crore on a net basis on Monday, according to exchange data.
