In early trade on Thursday, the Indian rupee slipped 12 paise to 77.74 against the US dollar (21.18 against the UAE dirham), weighed down by a muted trend in Indian equities and unabated foreign fund outflows.
The rupee opened at 77.72 against the dollar on the Indian interbank foreign exchange, before losing ground to quote at 77.74, a drop of 12 paise from the previous close.
According to Sriram Iyer, senior research analyst at Reliance Securities, the rupee opened weaker against the dollar on Thursday as global equities fell on concerns that high inflation and monetary policy tightening will fuel an economic slowdown.
Inflation, both globally and locally, will continue to put a strain on sentiment, according to Iyer.
Furthermore, foreign equity outflows will limit the appreciation bias.
The dollar index, which measures the strength of the greenback against a basket of six currencies, was down 0.15 percent at 103.65, as rising US yields and fears of higher interest rates weighed on investors. In Asian trade on Thursday morning, the US dollar eased slightly; however, the downside could be limited as poor US housing data adds to concerns about a slowdown.
On the Indian stock exchange, the 30-share Sensex was down 936.86 points, or 1.73 percent, at 53,271.67, while the broader NSE Nifty was down 284.80 points, or 1.75 percent, at 15,955.50.
Brent crude futures rose 1.37 percent to $110.61 per barrel, the global benchmark.
