MUMBAI: The rupee depreciated 6 paise to 88.16 against the US dollar in early trade on Tuesday, weighed down by persistent foreign fund outflows and dollar demand.
Forex traders said on Monday, the rupee touched a record intraday low of 88.33 against the dollar before clawing back slightly toward the close.
The sharp fall underscores the strain as India grapples with the steepest US tariffs among Asian exporters -- a headwind that continues to weigh on sentiment and currency stability.
At the interbank foreign exchange market, the rupee opened at 88.14 against the US dollar, then fell to 88.16, registering a decline of 6 paise over its previous close.
On Monday, the rupee closed at an all-time low of 88.10 against the US dollar.
"Higher tariffs are eroding India's export competitiveness. Foreign portfolio investors aren't waiting to see how this plays out: USD 2.4 billion has exited Indian equities over the past three sessions, leaving behind volatility across both currency and equity markets.
"Outflows of this scale not only strain the rupee but also cast doubts over near-term investment appetite," CR Forex Advisors MD – Amit Pabari said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.08 per cent to 97.84.
Brent crude, the global oil benchmark, was trading 0.44 per cent higher to USD 68.45 per barrel in futures trade.
"The rupee faces resistance near 88.50, with support around 87.50. With US tariff issues unresolved, risks remain skewed to the downside. Persistent foreign outflows or dollar strength could drive further weakness, while any recovery is likely to stay limited without clear trade relief," Pabari said.
On the domestic equity market front, Sensex climbed 207.45 points to 80,571.94 in early trade, while the Nifty advanced 60.8 points to 24,685.85.
Foreign Institutional Investors offloaded equities worth Rs 1,429.71 crore on Monday, according to exchange data.
Meanwhile, US President Donald Trump on Monday claimed that India has now "offered" to cut its tariffs to nothing, “but it's getting late”, as he said that India buys most of its oil and military products from Russia and very little from the US.
"What few people understand is that we do very little business with India, but they do a tremendous amount of business with us,” Trump said in a post on Truth Social.