Rupee turns flat at 85.04 against US dollar in early trade

MUMBAI: The rupee failed to sustain a recovery from its all-time low level and turned flat at 85.04 against the US dollar in early trade on Monday, giving in to the strengthening American currency and unabated outflow of foreign funds.

Forex traders said the rupee stayed weak due to significant dollar demand amid higher crude oil prices triggered by the volatile geopolitical situation, even though a positive sentiment in the domestic equity markets cushioned the local unit at lower level.

They said the dollar index is expected to remain elevated in the near-term amid the fear of delayed interest rate cuts by the US Federal Reserve in 2025.

At the interbank foreign exchange, the rupee opened at 85.02 and slipped to its previous session's closing level of 85.04 against the greenback.

On Friday, the rupee saw some recovery from its all-time low level and settled 9 paise higher at 85.04 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.13 per cent at 107.49.

Brent crude, the global oil benchmark, climbed 0.47 per cent to USD 73.28 per barrel in futures trade.

On the domestic equity market front, the 30-share benchmark index Sensex was trading 543.48 points, or 0.70 per cent higher at 78,585.07 points. The Nifty was up 186.10 points, or 0.79 per cent, to 23,773.60 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, as they offloaded shares worth Rs 3,597.82 crore, according to exchange data.

The latest RBI data on Friday showed India's forex reserves dropped by USD 1.988 billion to USD 652.869 billion for the week ended December 13. In the preceding week, the overall reserves had dropped by USD 3.235 billion to USD 654.857 billion.