Rupee falls 4 paise as oil prices climb and FIIs exit

The Indian rupee weakened by 4 paise to 96.39 against the US dollar in early trade on Tuesday. This decline came amid rising crude oil prices and continued foreign institutional investor (FII) outflows. However, gains in domestic equity markets and a softer dollar index helped limit further losses for the local currency.

The rupee opened at 96.29 at the interbank foreign exchange but quickly dropped to 96.39. On Monday, it had closed at 96.35, down 10 paise from the previous day. Analysts noted that the Reserve Bank of India (RBI) has been supporting the rupee around the 96.33 level, but demand from foreign portfolio investors (FPIs) and oil companies remains strong despite lower oil prices.

Brent crude, the global oil benchmark, was trading higher by 0.23% at USD 100.6 per barrel, while the dollar index, which measures the US dollar against a basket of six currencies, was down 0.04% at 102.12. Meanwhile, the RBI's Monetary Policy Committee began its three-day meeting on Monday and is expected to raise interest rates by 25 basis points, aligning with global central banks' hawkish stance due to escalating conflict in West Asia and inflation risks.

The last repo rate hike was in February 2023, when the RBI increased it by 0.25% to 6.50%. The rate remained unchanged through 2023-24 before the central bank started cutting rates in 2025. Currently, the repo rate stands at 5.25%. On the domestic equity front, the Sensex climbed 120.22 points to 72,535.41, and the Nifty rose 47.15 points to 22,603.10 in early trade. FIIs sold equities worth Rs 4,699.14 crore on Monday.