Rupee rises against US dollar in early trade; IIP boost offsets FII outflows

Rupee on Tuesday rose 3 paise to 89.95 against the US dollar in early trade supported by a weaker greenback and strong industrial output data.

However, foreign fund outflows, marginally higher crude oil prices and a weak start in domestic equities limited sharper gains, forex traders said.


At the interbank foreign exchange, the rupee opened at 89.98 and strengthened to 89.95 against the dollar, up from its previous close. Earlier on Monday, the local currency had depreciated 8 paise to settle at 89.98.

“The RBI on Monday protected the top end of the curve while FPIs who sold equities also were dollar buyers, keeping bids on for the full day and taking it almost to 90 levels,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP said, PTI reported.

Bhansali pointed to strong Index of Industrial Production (IIP) data released on Monday.

“The IIP came at a 25-month high of 6.7 per cent for November against expectation of 2.5 per cent and last month growth of 0.5 per cent. The growth during the year has been 3.30 per cent against 2.70 per cent in the last month,” he added.

Indian equity benchmark indices, Nifty50 and BSE Sensex, opened in red on weak global cues. While Nifty50 went below 25,950, BSE Sensex was down over 120 points. At 9:19 AM, Nifty50 was trading at 25,902.85, down 39 points or 0.15%. BSE Sensex was at 84,567.40, down 128 points or 0.15%.

Meanwhile, foreign institutional investors sold equities worth Rs 2,759.89 crore on Monday, according to exchange data, while the dollar index, which measures the greenback against a basket of six currencies, was marginally lower by 0.03 per cent at 98.01.