Mumbai: The rupee erased its initial modest gains, slipping 2 paise to 86.55 against the US dollar in early trade on Wednesday. While positive cues from domestic equity markets lent support, rising crude oil prices and heavy foreign fund outflows dampened sentiment.
Forex traders noted that a weakening US dollar provided some relief for the Indian currency at lower levels.
At the interbank forex market, the rupee opened at 86.50 and briefly touched 86.45 against the dollar before reversing gains to trade at 86.55, marking a 2-paise drop from the previous close.
On Tuesday, the rupee had recovered from its record low, gaining 17 paise to settle at 86.53 against the dollar.
Meanwhile, the Dollar Index, which measures the greenback’s strength against a basket of six major currencies, dipped 0.03% to 109.07.
Brent crude, the global benchmark for oil prices, inched up 0.06% to trade at USD 79.96 per barrel in futures.
On the domestic front, the BSE Sensex climbed 271.26 points, or 0.35%, to 76,770.89, while the Nifty rose 50.80 points, or 0.22%, to 23,226.85.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 8,132.26 crore on Tuesday, adding pressure to the rupee.
Data released by the government on Tuesday revealed wholesale price inflation increased to 2.37% in December 2024, driven by a surge in manufactured goods, even as food prices eased.
Simultaneously, retail inflation fell to a four-month low of 5.22% in December due to declining food prices. The dip in Consumer Price Index (CPI)-based inflation for the second consecutive month has raised expectations of a potential rate cut by the Reserve Bank of India in its upcoming policy review on February 7.
