Mumbai, Dec 31: The Indian rupee fell 15 paise to 89.90 against the US dollar in early trade on Wednesday, pressured by foreign fund outflows and a muted start in domestic equity markets.
At the interbank forex market, the rupee opened at 89.89 and then dipped to 89.90, down 15 paise from Tuesday’s close of 89.75. Analysts said continued selling by foreign portfolio investors (FPIs) has been a key factor weighing on the rupee in recent months.
“US-India trade uncertainties continue with FPIs pulling out USD 16.5 billion from equities this year, adding to importer demand and exporter caution,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP. He added that with inflation on the lower side, the rupee lacks interest rate support for appreciation, and consistent FPI inflows would be needed to strengthen it.
For trading strategy, Bhansali suggested, “Importers can buy the dips while exporters can sell near the 90.00 level.”
Meanwhile, the dollar index, which measures the greenback against a basket of six currencies, edged up 0.04% to 98.27. Brent crude futures were trading 0.08% lower at USD 61.30 per barrel.
On the domestic equity front, the Sensex opened 188.31 points higher at 84,863.39, while the Nifty rose 80.70 points to 26,009.55. However, FPIs offloaded equities worth Rs 3,844.02 crore on Tuesday, according to exchange data, adding to pressure on the rupee.