Rupee slips 8 paise vs US dollar in early trade amid drop in oil prices

The rupee on Monday opened eight paise lower at 70.96 against the US dollar amid drop in crude oil prices and rise in Asian equities. The domestic unit on Friday closed almost flat at 70.88 against after the Reserve Bank of India (RBI) in a widely expected move cut key interest rates by 0.25 percentage point.

On a weekly basis, the local unit slumped by 32 paise.

The Reserve Bank on Friday cut its benchmark lending rate by 0.25 percentage point to revive economic growth and affirmed commitment to remain accommodative to address growth concerns 'as long as necessary'.

"Overall the policy was in line with market expectations and it did not have any major impact on the rupee," said Rahul Gupta, Currency Head Research, Emkay Global Financial Services.

That apart, foreign portfolio investors offloaded equities worth around Rs 3,000 crore in just three trading sessions of October amid fears of global recession and trade war. This follows a net investment of around Rs 7,850 crore by foreign portfolio investors (FPI) into equities in September.

Market experts, however, believe that FPI inflows are expected to pick up after the rate cut by the Reserve Bank of India (RBI) and several decisions taken by the capital markets regulator Securities and Exchange Board of India (Sebi).

"Today, USD/INR pair is expected to quote in the range of 70.70 and 71.50," says Gaurang Somaiya, Research Analyst (Currency) at Motilal Oswal Financial Services (MOFSL).

On the global front, Asian shares edged higher in early trade after data showed the US unemployment rate dropped to the lowest in almost 50 years, easing concerns of a slowdown in the world’s largest economy. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.18 per cent. Australian shares were up 0.5 per cent. Japan's Nikkei stock index opened higher but reversed course and fell 0.3 per cent.

US stock futures, ESc1 fell 0.44 per cent in Asia on Monday after the S&P 500 surged 1.4 per cent on Friday, said a Reuters report.

In commodities, oil prices fell on Monday, extending last week’s heavy losses. Brent crude futures edged down 24 cents to $58.13 a barrel by 7:17 am while US West Texas Intermediate (WTI) crude was at $52.69, down 12 cents, the report added.