Mumbai: The rupee declined 12 paise to 68.86 against the US dollar in early trade on Thursday, pressured by a lower opening in the domestic stock market, reported news agency Press Trust of India. Increased demand for the American currency from importers and banks amid persistent foreign fund outflows also weighed on the rupee, it further said. Foreign portfolio investors (FPIs) sold shares worth Rs 284.58 crore yesterday, as per provisional data. Forex dealers said the rise of euro and yen against the greenback capped the rupee's fall.
After strong recovery, the rupee yesterday reversed most of its gains towards the fag-end session, losing 17 paise at 68.74 against the US dollar amid rising crude oil prices and inflationary concerns after MSP hike for kharif crops by the government, which will cost the exchequer more than Rs 15,000 crore.
The move is seen further propelling inflationary concerns that may prompt the Reserve Bank of India (RBI) to raise interest rates more steeply than expected. RBI had underlined the upside risk to inflation projections in its last monetary policy and raised the repo rate by 25 basis points. The rate hike was clearly prompted against the grim backdrop of rising crude oil prices and elevated commodity inflation worldwide
Meanwhile, the benchmark Sensex moved down by 25.12 points, or 0.07 per cent, at 35,620.28 and the NSE Nifty rose 16 points higher to hit 10,786 in the opening trade today.
(With PTI Inputs)
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