Rupee rises 11 paise to 85.93 against US dollar in early trade

Mumbai: The rupee rose 11 paise to 85.93 against the US dollar in early trade on Tuesday defying pressures from a weak opening in the domestic markets, rise in global crude oil prices, and a stronger dollar.

At the interbank foreign exchange, the rupee opened at 85.96 against the greenback before rising further to 85.93, up 11 paise from its previous close. The rupee had closed at 86.04 on Monday.

"If rupee closes above 86.20 today (Tuesday) or any day the importers will have hit a stop loss as the gains for dollar could go up to 86.70. One can, however, be satisfied for the presence of the Reserve Bank of India at 86.20 where it has been selling dollars to keep rupee steady," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

"The oil prices are the main factor for the rupee as FPIs and oil companies snap up dollars to fund their respective outflows. Today's given range is 85.75 to 86.30 and all depends on how the war progresses and what the RBI does in the market," he said.

The prices of Brent crude -- the global oil benchmark -- rose 0.34 per cent to 73.48 per barrel in futures trade after rising sharply over the past few days owing to the escalating Israel-Iran conflict.

"Brent oil prices rose to $74.04 per barrel after US president issued a warning against Tehran over the Israel- Iran conflict, keeping concerns of supply disruptions largely in play," Bhansali said.

In the domestic equity market, the 30-share BSE Sensex declined 127.02 points to 81,669.13 in early trade, while Nifty was down 55 points to 24,891.50.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was up 0.17 per cent to 98.16.

According to the monthly data released by the Ministry of Statistics & Programme Implementation on Monday, the rate of unemployment in the country rose to 5.6 per cent in May from 5.1 per cent in April this year mainly due to seasonal variation.

After registering a positive growth for two months, India's exports slipped into negative territory again, contracting 2.17 per cent year-on-year to $38.73 billion in May due to a fall in global petroleum prices, while trade deficit narrowed at $21.88 billion during the month, as per the latest government data released on Monday.

Imports declined 1.7 per cent year-on-year to $60.61 billion in May.

Foreign institutional investors (FIIs) offloaded equities worth Rs 2,539.42 crore on a net basis on Monday, according to exchange data.