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

The Indian rupee slipped 4 paise to 96.39 against the US dollar in the early trading session on Tuesday, influenced by a surge in crude oil prices and continued outflows from Foreign Institutional Investors (FIIs). Despite positive market sentiment in domestic equities and a weaker dollar index, the local currency managed to stay relatively stable.

At the interbank foreign exchange market, the rupee opened at 96.29 but slipped to 96.39, marking a 4 paise decrease from the previous day's close. On Monday, the rupee weakened by 10 paise, closing at 96.35 against the US dollar. The Reserve Bank of India (RBI) has been working to prevent the rupee's decline from falling further, but the demand for dollars from FIIs and oil companies has not abated despite the drop in oil prices to $100.63 per barrel and the dollar index reaching 102.12.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted this. The RBI's Monetary Policy Committee held its three-day meeting on Monday and is expected to raise the repo rate by 25 basis points, aligning with a hawkish stance due to the ongoing conflict in West Asia, which poses risks to domestic inflation.

The last rate hike was in February 2023 when the RBI increased the rate by 0.25 percentage points to 6.50%. The repo rate has remained unchanged since 2023-24, with the current policy repo rate at 5.25%. Meanwhile, the dollar index, which measures the strength of the greenback against a basket of six currencies, stood at 102.12, down 0.04%.

Brent crude, the global oil benchmark, rose by 0.23% to $100.6 per barrel in futures trade. On the domestic equity market, the Sensex rose 120.22 points to 72,535.41 in early trade, while the Nifty increased by 47.15 points to 22,603.10. FIIs sold equities worth ₹4,699.14 crore on a net basis on Monday, according to exchange data.