The rupee declined 16 paise to 86.88 against the US dollar in early trade on Tuesday amid a strengthening greenback, sustained FII outflows, and a rise in Brent crude prices.
A rebound in the domestic equity markets prevented further fall in the domestic unit, according to forex traders.
At the interbank foreign exchange, the local unit opened at 86.83, before sliding further to 86.88, down 16 paise from Monday’s close of 86.72.
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“The rupee was again sold off on Monday as month-end dollar demand kept rupee lower from a high of 86.56 to 86.75. Due to risk of sentiments, the market is expected to buy dollars to take it higher against the rupee,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
Meanwhile, the domestic equity markets rebounded on Tuesday with the 30-share BSE Sensex rising 117.57 points to 74,571.98 in early trade, while Nifty was up 31.3 points to 22,584.65.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.03 per cent to 106.62.
Brent crude, the global oil benchmark, went up 0.51 per cent to 75.16 per barrel in futures trade.
Foreign institutional investors (FIIs) offloaded equities worth ₹6,286.70 crore on a net basis on Monday, according to exchange data.