Rupee falls 6 paise to 94.69 against US dollar in early trade

MUMBAI: The rupee fell 6 paise to 94.69 against the US dollar in early trade on Tuesday as the greenback strengthened further to hover around its 13-month high.

FII outflows and a weaker start to the morning trade at the domestic equity markets put further pressure on the rupee while a decline in crude oil prices cushioned against a steeper decline, forex traders said.

At the interbank foreign exchange, the rupee opened at 94.73 against the US dollar before rising to 94.69, down 6 paise from its previous close.

The rupee depreciated 30 paise to close at 94.63 against the US dollar on Monday.

"The rupee opened weaker against the US dollar, as mounting expectations of a Federal Reserve rate hike and broad-based dollar strength weighed on Asian currencies. The greenback hovered near a 13-month high, supported by optimism surrounding US-Iran peace negotiations and weakness in major currencies, particularly the British pound and Japanese yen," Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said.

"While easing crude oil prices amid progress in US-Iran talks may offer some support to the rupee, the Fed's hawkish stance and higher inflation outlook are likely to keep gains limited. Meanwhile, India's infrastructure output growth slowed to 0.5 per cent in May, signaling a moderation in economic activity," Yadav said.

"The rupee will remain in a range of 94.20 to 94.90 for the day with upticks to the dollar to be sold off," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 101.04, up 0.02 per cent, amid hawkish Fed and the fragile US-Iran trade deal.

Brent crude, the global oil benchmark, was trading lower by 0.46 per cent at USD 77.54 per barrel in futures trade.

On the domestic equity market front, Sensex declined 57.43 points to 77,061.94 in early trade while the Nifty was down 31.6 points to 24,071.30.

Foreign institutional investors turned net sellers, offloading equities worth Rs 635.91 crore on a net basis on Monday, according to exchange data.