Rupee falls 7 paise to 84.73 against US dollar in early trade

Forex traders said the rupee remains in a weakening mode due to dollar demand from importers and foreign banks.

At the interbank foreign exchange, the rupee opened at 84.70 against the greenback, then touched 84.73 in the initial trade, registering a fall of 7 paise over its previous close.

On Friday, the rupee appreciated by 5 paise to settle at 84.66 against the US dollar.

"On the domestic front, all eyes will be on Industrial Production (IIP) and CPI data following last week's RBI monetary policy announcement. The 50-basis point CRR cut provided much-needed liquidity and lent support to the Rupee," CR Forex Advisors MD Amit Pabari said.

The Reserve Bank of India on Friday kept its key interest rate unchanged citing inflation risks, but cut the Cash Reserve Ratio that banks are required to park with the central bank, boosting money with lenders to support a slowing economy.

Pabari further said that a wave of IPO activity is expected to drive substantial inflows, offering additional support to the rupee.

"We anticipate the rupee's downside to remain limited, with the USDINR pair likely to trade in a range of 84.50 to 85 in the near term," Pabari added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.08 per cent at 106.14.

Brent crude, the global oil benchmark, rose 0.08 per cent to USD 106.15 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex was trading 76.29 points or 0.09 per cent down at 81,632.83 points in morning trade, while Nifty was down 24.20 points or 0.1 per cent to 24,653.60 points.

Foreign Institutional Investors (FIIs) offloaded Rs 1,830.31 crore in the capital markets on net basis on Friday, according to exchange data.

Meanwhile, India's forex reserves increased by USD 1.51 billion to USD 658.091 billion for the week ended November 29, the RBI said on Friday.

The overall reserves had dropped by USD 1.31 billion to USD 656.582 billion in the previous reporting week.