Rupee declines 10 paise to 85.49 against US dollar in early trade

The rupee depreciated 10 paise to 85.49 against the US dollar in early trade on Tuesday amid a slight recovery in the American currency against major rivals, higher crude oil prices and outflow of foreign funds.

Volatile domestic equity markets ahead of the Reserve Bank's monetary policy announcements also weighed on the Indian currency, forex traders said.

RBI's Monetary Policy Committee (MPC) will begin the deliberations on its next bi-monthly policy on June 4 and the outcome is scheduled to be announced on June 6.

At the interbank foreign exchange, the domestic unit opened weak and stayed in a narrow range, trading 10 paise lower at 85.49 against the greenback in initial deals.

On Monday, the rupee appreciated 16 paise to settle at 85.39 against the dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.23 per cent at 98.86.

Brent crude, the global oil benchmark, rose 0.51 per cent to USD 64.96 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex fell 36.42 points, or 0.04 per cent, to 81,337.33, while the Nifty slipped 43.25 points or 0.17 per cent to 24,673.35.

Foreign institutional investors (FIIs) sold equities worth Rs 2,589.47 crore on a net basis on Monday, according to exchange data.

A monthly survey released on Monday showed India's manufacturing sector growth fell to a three-month low in May, restricted by inflationary pressures, softer demand and heightened geopolitical conditions.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) fell from 58.2 in April to 57.6 in May, highlighting the weakest improvement in operating conditions since February.

The latest government data released on Friday showed the Indian economy expanded at a faster pace than expected in the last quarter of the 2024-25 fiscal.

The GDP growth rate of 7.4 per cent in the January-March period of FY25 reflected a strong cyclical rebound that was helped by a rise in private consumption and robust growth in construction and manufacturing.

The government also managed to meet its fiscal deficit target of 4.8 per cent of the GDP for 2024-25, according to the provisional data released by the Controller General of Accounts on Friday.

Moreover, the country's gross GST collection remained above the Rs 2 lakh crore mark for the second month in a row, rising 16.4 per cent in May to over Rs 2.01 lakh crore. Goods and Services Tax (GST) collection had touched a record high of Rs 2.37 lakh crore in April. PTI