Rupee falls 18 paise to 86.88 against US dollar in early trade

Mumbai: The rupee depreciated 18 paise to 86.88 against the US dollar in early trade on Tuesday as month-end dollar demand and sustained foreign fund outflows weighed on the local unit.

Forex traders said the domestic unit traded with a negative bias as the demand for dollars from importers continued to keep the American unit well bid against the rupee.

Moreover, a muted trend in domestic equities and sustained foreign fund outflows further dented investors' sentiments, they said.

At the interbank foreign exchange market, the rupee opened at 86.76 and then touched an early low of 86.88 against the American currency, registering a fall of 18 paise over its previous close.

On Monday, the rupee had settled at 86.70 against the dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose marginally by 0.01 per cent to 98.64.

Brent crude, the global oil benchmark, went up by 0.04 per cent to USD 70.07 per barrel in futures trade, as developing trade agreements eased tariff concerns and boosted future energy demands.

The rupee opened on a weaker note and could fall to one-month low of 86.90 this week, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

"RBI seems to be protecting the rupee intermittently but has allowed the fall in slow and steady way. Equities have also not been rupee-supportive," he said.

Meanwhile, in the domestic equity market, Sensex was trading 51.09 points or 0.06 per cent higher at 80,942.11, while Nifty rose 18.30 points or 0.07 per cent to 24,699.20.

Foreign institutional investors (FIIs) offloaded equities worth Rs 6,082.47 crore on a net basis on Monday, according to exchange data.