Rupee falls 15 paise to 88.65 against US dollar in early trade

This is the second time in less than two weeks that the US president held out hope to seal the proposed bilateral trade deal with India.

The rupee depreciated 15 paise to 88.65 against the dollar in early trade on Wednesday, weighed down by elevated crude oil prices and foreign fund outflows.

Forex traders said renewed optimism over the India-US trade deal supported the domestic unit at lower levels.

At the interbank foreign exchange, the rupee opened at 88.61 against the US dollar before dropping to 88.65, down 15 paise from its previous close.

On Tuesday, the rupee had settled at 88.50 against the US dollar.

Forex traders said the MSCI Review may result in positive foreign fund inflows. Global index provider MSCI announced the inclusion of Fortis Healthcare, GE Vernova T&D India, One 97 Communications (Paytm), and Siemens Energy India in its Global Standard Index.

These changes are expected to trigger passive inflows into these stocks as global funds adjust their portfolios, they said.

"As these passive inflows pour in, they could provide an additional cushion to the rupee in the near term, offsetting any temporary weakness from global uncertainty," said CR Forex Advisors MD Amit Pabari.

Moreover, the optimism over a nearing US trade deal supported the local unit, they said.

The US is "pretty close" to reaching a "fair trade deal" with India, President Donald Trump has said, adding that he will lower the tariffs imposed on Indian goods at "some point".

This is the second time in less than two weeks that the US president held out hope to seal the proposed bilateral trade deal with India.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent higher at 99.50.

Brent crude, the global oil benchmark, was trading 0.26 per cent lower at USD 65 per barrel in futures trade.

On the domestic equity market front, the Sensex jumped 502.82 points to 84,374.14 in early trade, while the Nifty surged 144.05 points to 25,839.

Foreign Institutional Investors sold equities worth Rs 803 crore on Tuesday, according to exchange data.