Daijiworld Media Network - Mumbai

Mumbai, Oct 6: The rupee declined 4 paise to 96.39 against the US dollar in early trade on Tuesday, pressured by rising crude oil prices and sustained foreign investor outflows.

Forex traders said positive sentiment in domestic equity markets and a weaker dollar index helped limit the rupee's decline.

At the interbank foreign exchange, the rupee opened at 96.29 and slipped to 96.39, down 4 paise from its previous close. The domestic currency had declined 10 paise to close at 96.35 against the US dollar on Monday.

"The Reserve Bank has been protecting the rupee from its fall at 96.33 but the demand of dollar from FPIs and oil companies has not come down despite oil falling to USD 100.63 per barrel and dollar index to 102.12," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

Meanwhile, the Reserve Bank of India's Monetary Policy Committee began its three-day meeting on Monday. The panel is expected to announce its decision amid heightened concerns over inflation and economic risks arising from the escalating conflict in West Asia.

The RBI's last repo rate hike was in February 2023, when it raised the rate by 25 basis points to 6.50 per cent. The central bank kept the rate unchanged through 2023-24 before beginning its rate-cut cycle in 2025. The policy repo rate currently stands at 5.25 per cent.

The dollar index, which measures the greenback's strength against a basket of six major currencies, was trading 0.04 per cent lower at 102.12.

Brent crude, the global oil benchmark, was trading 0.23 per cent higher at USD 100.60 a barrel in futures trade.

Domestic equities provided some support to the rupee, with the Sensex gaining 120.22 points to 72,535.41 in early trade, while the Nifty advanced 47.15 points to 22,603.10.

Foreign Institutional Investors remained net sellers, offloading equities worth Rs 4,699.14 crore on Monday, according to exchange data.