Rupee falls 2 paise to ₹86.55 against US dollar in early trade

The rupee pared its initial marginal gain and slipped 2 paise to ₹86.55 against the US dollar in early trade on Wednesday as the positive sentiment in the domestic equity markets was negated by elevated crude oil prices and massive withdrawal of foreign funds.

A retreating American currency, however, supported the Indian currency at lower level, forex traders said.

At the interbank foreign exchange, the rupee opened at ₹86.50 and touched ₹86.45 against the greenback in initial deals. However, the local unit soon pared the gains and traded at ₹86.55 against the dollar, 2 paise lower from its previous close.

On Tuesday, the rupee rebounded from its lowest-ever level and settled with a gain of 17 paise at ₹86.53 against the dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03% lower at 109.07.

Brent crude, the global oil benchmark, rose 0.06% to USD 79.96 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex was trading 271.26 points, or 0.35%, higher at 76,770.89 points, while the Nifty was up 50.80 points, or 0.22%, at 23,226.85.

Foreign institutional investors (FIIs) offloaded equities worth ₹8,132.26 crore on Tuesday.

Government data released on Tuesday showed that wholesale price inflation rose to 2.37% in December 2024, led by a spike in manufactured products even though prices of food items eased.

Another data on Monday showed retail inflation declined to a four-month low of 5.22% in December amid easing of prices in the food basket, fuelling expectations that the Reserve Bank of India (RBI) will reduce the key interest rate in upcoming monetary policy review on February 7.

The inflation based on the Consumer Price Index (CPI) eased for the second month in a row after it breached the RBI's upper tolerance level of 6 per cent in October.