Rupee falls 7 paise to 85.83 against US dollar in early trade

Mumbai: The rupee stayed on sliding track and depreciated 7 paise to 85.83 against the US dollar in early trade on Tuesday due to massive withdrawal of foreign funds amid global economic turbulence triggered by the escalated tariff war.

A recovery in crude oil prices pulled the domestic currency further down even as it found some cushion due to a weaker American currency and strong recovery in the domestic equity markets, forex traders said.

The global markets have been facing extreme volatility following a fresh threat by the US administration to impose a punitive 50 per cent tariff against China's retaliatory 34 per cent import levies on American products, they said, adding at the same time the domestic investors are keenly awaiting Reserve Bank of India's interest rate decision.

The RBI's monetary policy committee headed by Governor Sanjay Malhotra began its three-day deliberations on key interest rates on Monday. The decision is scheduled to be announced on Wednesday.

At the interbank foreign exchange, the rupee opened at 85.89 and strengthened slightly to trade at 85.83 against the greenback during initial deals, 7 paise lower than its previous closing level.

The rupee settled 32 paise lower at 85.76 against the US dollar on Monday after losing 14 paise in the preceding session on Friday.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.23 per cent lower at 102.73.

Brent crude, the global oil benchmark, showed some recovery as it gained 1.34 per cent to $65.07 per barrel in futures trade.

The domestic equity markets rebounded from record low levels with the 30-share BSE Sensex surging 1171.51 points, or 1.60 per cent, to 74,309.41, while the Nifty jumped 374.30 points, or 1.69 per cent, to 22,535.90 points.

Both the benchmark indices crashed over 5 per cent on Monday before closing nearly 3 per cent lower.

Foreign institutional investors (FIIs) offloaded equities worth Rs 9,040.01 crore on a net basis on Monday, according to exchange data.