Rupee slips 25 paise to 85.86 against US dollar on FII outflows

The rupee weakened by 25 paise to 85.86 against the US dollar in early trade on Wednesday amid FII outflows. The decline was cushioned by positive equities and soft crude prices. Markets await RBI's policy announcement later this week.

Mumbai: The rupee depreciated 25 paise to 85.86 against the US dollar in early trade on Wednesday amid outflows of foreign funds.

Forex traders said the decline was limited by a positive domestic equity market, softer global crude oil prices and a weak American dollar.

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At the interbank foreign exchange, the rupee opened on a weak note at 85.69 and slipped further by 25 paise to 85.86 against the American currency in early trade.

On Tuesday, the rupee fell 22 paise to settle at 85.61 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.05 per cent at 99.18.

Brent crude, the global oil benchmark, declined 0.32 per cent to USD 65.42 per barrel in futures trade.

“Restrictive flows have kept the rupee ranged between 85-86 in the past two weeks, with the RBI selling dollars at 85.70-75 levels. The RBI MPC begins its 3-day deliberations today with the announcement of rates on Friday morning and is expected to cut repo rate by 25 bps to 5.75 per cent,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

In the domestic equity market, the 30-share BSE Sensex climbed 230.17 points to 80,967.68, while the Nifty rose 70.25 points to 24,612.75.

Foreign Institutional Investors (FIIs) sold equities worth Rs 2,853.83 crore on a net basis on Tuesday, according to exchange data.