In early trade, the rupee drops 12 paisas to 83.56 against the dollar.

In early trade on Tuesday, the Indian rupee lost 12 paise against the US dollar, closing at 83.56. The fall was ascribed to the appreciation of the US dollar in global markets and the increase in the price of crude oil. Forex traders reported that rising US yields were driving oil importers and foreign portfolio investors (FPIs) to buy US dollars, further undermining the value of the local currency.

The rupee began trading at 83.51 on the interbank foreign currency market and lost momentum immediately. In its first trades, it was trading at 83.56 against the dollar, down 12 paise from its previous closing level. The rupee dropped by 10 paise versus the US dollar on Monday, closing at 83.44. According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, dollar purchasing by oil and FPI investors pushed by higher US yields caused the rupee to fall back to 83.44 on Monday after initial inflows bringing it to 83.37.

According to Bhansali, the rupee may reach 83.55 on Tuesday before leveling out around 83.45, indicating a tight trading range for the day between 83.40 and 83.55. Meanwhile, a spike in US treasury yields as investors bet on the potential ramifications of a second Trump presidency drove the dollar index, which gauges the strength of the US currency against a basket of six major currencies, to trade at 105.91, up 0.02%.

The pressure on the currency increased concurrently as the global oil benchmark, Brent crude futures, increased by 0.22% to USD 86.80 a barrel. The key indices of the local equities markets, the Sensex and Nifty, reached all-time highs in early trade. These gains, however, were fleeting as the indices fell, with the NSE Nifty falling by 25.55 points, or 0.11%, to 24,116.40 points, and the Sensex falling by 64.46 points, or 0.08%, to 79,411.73 points.

Furthermore, according to exchange statistics, Foreign Institutional Investors (FIIs) sold shares worth Rs 426.03 crore on Monday, making them net sellers in the capital markets. These elements acting together caused the rupee’s value to decline versus the US dollar during the early trading session.

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