The rupee fell 11 paise to 83.93 versus the US dollar in early trade on Thursday, owing to increasing crude oil prices and negative mood in local equities markets amid fears over intensifying tensions in the Middle East. The unabated drain of foreign funds from capital markets, along with a stronger American dollar, impacted on the Indian rupee, forex dealers said.
At the interbank foreign exchange, the local currency started at 83.91 and fell further to 83.93 versus the dollar, trading 11 paise lower than the previous session's closing level. On Tuesday, the rupee fell 3 paise to 83.82 versus the dollar. The FX markets were closed on Wednesday in observance of Mahatma Gandhi Jayanti.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, increased 0.10 percent to 101.53. Brent crude, the worldwide benchmark, rose 1.11 percent to 74.72 in futures trading.
Experts ascribed the rise in petroleum prices to fears of Israeli assaults on Iran's oil infrastructure amid rising Middle Eastern tensions. On the domestic equities market front, the Sensex down 829.97 points, or 0.09 percent, to 83,436.32, while the Nifty dropped 270.65 points, or 1.05 percent, to 25,526.25.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday, selling shares worth Rs5,579.35 crore in cash, according to exchange data. FIIs have sold shares worth more over Rs 15,000 crore since Monday. According to analysts, foreign investors withdrew cash as Chinese equities rallied following the announcement of a barrage of stimulus measures to boost the economy.
On the domestic macroeconomic front, a monthly survey issued on Tuesday revealed that India's manufacturing sector growth fell to an eight-month low in September, with a slower increase in factory production, sales, and new export orders. The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) dropped from 57.5 in August to 56.5 in September, the slowest rate of expansion since January.
