Rupee falls 16 paise to 96.13 against US dollar in early trade

India's rupee weakened by 16 paise, falling below the 96 per dollar mark in early trading on Tuesday. This decline was attributed to high crude oil prices and continuous outflows of foreign funds. Forex traders attributed the pressure on the rupee to the combination of rising US nominal and real yields, which are prompting portfolio flows out of emerging markets, including India.

The rupee opened at 96.03, then dropped to 96.13 against the US dollar, marking a 16 paise decrease from the previous close. The rupee had settled at 95.97 against the US dollar on Monday. In the near future, the rupee could reach 96.50, with a break above this level potentially leading to the 98 mark. Major support is currently at 95.50.

Despite domestic strength, such as industrial output rising by 8% in August, the Reserve Bank's recent bond sales, which were well-received, are supporting the currency's adjustment. The dollar index, which measures the greenback's strength against a basket of six currencies, was at 101.23, a 0.04% increase. Meanwhile, Brent crude, the global oil benchmark, rose by 1.51% to USD 106.87 per barrel due to concerns about potential interruptions in crude supplies through the Strait of Hormuz.

On the stock market, the Sensex dropped 503 points to 72,260.09, while the Nifty fell by 151 points to 22,626.50. Foreign Institutional Investors (FIIs) netted an outflow of Rs 5,353.22 crore in equities on Monday, as per exchange data.