Rupee falls 22 paise to ₹85.67 against US dollar in early trade

The rupee depreciated 22 paise to ₹85.67 against the US dollar in early trade on Thursday, weighed down by negative domestic equities amid significant geopolitical escalation that has injected fresh uncertainty into the regional risk perception.

Forex traders said heightened geopolitical tensions, following a terror attack in Pahalgam, Jammu & Kashmir weighed on market sentiment.

On the global front, the US dollar index surged from its recent low of 97.92 to 99.94, marking a notable comeback driven by optimism around a potential de-escalation in US-China trade tensions, they added.

At the interbank foreign exchange, the domestic unit opened at ₹85.60 and fell to an intraday low of ₹85.67 against the greenback, registering a loss of 22 paise over its previous close.

On Wednesday, the rupee depreciated 26 paise and settled for the day at ₹85.45 against the US dollar.

India on Wednesday downgraded diplomatic ties with Pakistan and announced a raft of measures, including expulsion of Pakistani military attaches, suspension of the Indus Water Treaty of 1960, and immediate shutting down of the Attari land-transit post in view of the cross-border links to the horrific Pahalgam terror attack that killed 26 civilians.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.17% at 99.67.

Brent crude, the global oil benchmark, rose 0.09% at USD 66.21 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex slumped 281.71 points or 0.35% to 79,834.78, while the Nifty fell 77.70 points or 0.32% to 24,251.25.

Foreign institutional investors (FIIs) bought equities worth ₹3,332.93 crore on a net basis on Wednesday, according to exchange data.