Rupee falls 3 paise to 95.91 against US dollar in early trade

MUMBAI: The rupee fell 3 paise to 95.91 against the US dollar in early trade on Wednesday, facing pressure from a strong American currency and outflow of foreign funds.

Positive domestic equity markets, however, supported the local currency, even as crude oil prices remained elevated amid heightened tension in West Asia, forex traders said.

At the interbank foreign exchange market, the rupee opened at 95.89 against the US dollar and fell further to 95.91, trading 3 paise lower from its previous close.

The rupee settled 34 paise lower at 95.88 against the American currency on Tuesday, after weakening by 113 paise or more than 1 per cent in the preceding five sessions since the closing level of 94.43 recorded on September 4.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.38, higher by 0.04 per cent.

The higher dollar index was attributed to market expectations of a hike in interest rate by the US Federal Reserve, which will announce its monetary policy decision on Wednesday.

Experts said that the Fed is likely to hike the funds rate for the first time in three years in an effort to rein in inflation triggered by higher oil prices.

Brent crude, the global oil benchmark, was trading lower by 0.58 per cent but remained elevated at USD 108.12 per barrel in futures trade.

According to analysts, global oil markets have been roiled by fresh tensions in West Asia after attacks from Iranian-backed Houthi rebels in Yemen against Saudi Arabia's shipping and infrastructure. Traders fear the escalating conflict could disrupt Saudi oil exports out of the Red Sea.

On the domestic equities market front, Sensex climbed 240.75 points, or 0.33 per cent, to 74,244.57 in morning trade, while the Nifty gained 83.70 points,or 0.36 per cent to 23,202.30.

Foreign institutional investors (FIIs) offloaded equities worth Rs 2,977.86 crore on a net basis on Tuesday, according to exchange data.