The Indian rupee witnessed a sharp depreciation of 30 paise against the US dollar in early trade on Monday, reaching 87.25, as the American currency rebounded from a six-month low while trade-related uncertainties continued to weigh on investor sentiment.
A weak domestic equity market, coupled with persistent outflows of foreign funds, exerted further pressure on the local currency.
However, some support was derived from declining crude oil prices, foreign exchange traders stated.
At the interbank foreign exchange market, the rupee commenced trading on a weaker note at 87.24 amid heightened volatility, before slipping further to a low of 87.34.
It was trading at 87.25 against the greenback in early deals, marking a decline of 30 paise from its previous closing level.
On Friday, the rupee had appreciated by 17 paise to close at 86.95 against the US dollar. The currency had earlier settled 6 paise lower at 87.12 on Thursday, snapping a three-session rally.
Meanwhile, the dollar index, which assesses the greenback’s strength against a basket of six currencies, was trading marginally higher by 0.03 per cent at 103.84.
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In the commodities market, Brent crude, the global oil benchmark, recorded a decline of 0.58 per cent to USD 69.95 per barrel in futures trade.
In domestic equities, the 30-share BSE Sensex was trading 133.39 points, or 0.18 per cent, higher at 74,465.97, while the NSE Nifty rose by 34.05 points, or 0.15 per cent, to 22,586.55. Both indices had closed nearly flat on Friday after witnessing sharp gains in the previous two sessions.
Foreign institutional investors (FIIs) offloaded equities worth Rs 2,035.10 crore on a net basis on Friday, according to exchange data.
Meanwhile, data released by the Reserve Bank of India (RBI) on Friday indicated that the country's foreign exchange reserves fell by USD 1.781 billion to USD 638.698 billion for the week ended 28 February.
This came after the forex kitty had expanded by USD 4.758 billion to USD 640.479 billion in the preceding reporting week.
On the global economic front, data from the US Labour Department on Friday showed increased hiring activity in February, although the unemployment rate inched up to 4.1 per cent.
Economists have suggested that the outlook remains uncertain amid US President Donald Trump’s threats of a trade war and measures to downsize the federal workforce.
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