Mumbai: The rupee depreciated 32 paise to 85.64 against the US dollar in early trade on Thursday, tracking a negative trend in domestic equities.
Forex traders said investors are awaiting cues from US FED Chair Jerome Powell's speech on Thursday. His comments will be closely watched on how the Central Bank plans to proceed with Monetary Policy easing, they said.
Meanwhile, the weakness of the American currency and easing crude oil prices offered some support to the local unit and restricted the downfall.
At the interbank foreign exchange, the domestic unit opened at 85.53 and fell to 85.64 against the greenback, registering a loss of 32 paise over its previous close.
On Wednesday, the rupee pared most of its initial gains and ended the day higher by 4 paise at 85.32 against the American currency.
The rupee witnessed a modest depreciation on Wednesday. "The move was largely driven by India's Wholesale Price Inflation data, which cooled to a 13-month low of 0.85 per cent in April," CR Forex Advisors MD Amit Pabari said.
"With inflation easing, expectations have risen that the RBI could consider another rate cut in its June monetary policy meeting. While this may be positive for growth in the medium term, in the short run, a cut in rates could pressure the rupee due to increased money supply and narrowing interest rate differentials," Pabari said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.23 per cent at 100.81.
Brent crude, the global oil benchmark, fell 1.92 per cent to USD 64.82 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex declined 230.76 points, or 0.28 per cent, to 81,099.80, while the Nifty fell 54.95 points, or 0.22 per cent, to 24,611.95.
Foreign institutional investors (FIIs) bought equities worth Rs 931.80 crore on a net basis on Wednesday, according to exchange data.
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