The rupee declined in early trade on Friday to settle at 89.94 against the US dollar as trade deal uncertainty, foreign fund outflows and crude oil price recovery weighed it down.
At the interbank foreign exchange, the local unit opened at 89.84 against the dollar but lost ground to trade at 89.94, down 23 paise from its previous close.
Forex traders said a negative trend in domestic equities and dollar demand from importers would further dent investor sentiment.
On Wednesday, the rupee pared initial gains and settled for the day lower by eight paise at 89.71 against the US dollar.
Forex and equity markets opened on Friday after Thursday holiday on account of Christmas.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said the domestic unit had restarted its fall in holiday-thin trade after a short stint at gaining strength last week to reach the 89.00 level.
Also Read: In a first, rupee breaches 91-mark against US dollar
“But, with FPIs continuing to sell equity and buy dollars after a brief pause, the rupee is declining again,” he said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.08 per cent lower at 97.89.
Brent crude, the global oil benchmark, was trading 0.16 per cent higher at USD 62.34 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex declined 183.42 points to 85,225.28 in early trade, while the Nifty dipped 46.45 points to 26,095.65.
Foreign institutional investors offloaded equities worth ₹1,721.26 crore on Wednesday, according to exchange data.
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