Rupee rises 14 paise to 71.58 against USD in early trade

The rupee appreciated by 14 paise to 71.58 against the US dollar in early trade on Monday as China's easing move and rate cut hopes by the US Fed enthused investors.

Forex traders said market investors were optimistic about cut in interest rates by the US Federal Reserve following below-par US jobs data.

Besides, China's easing move also enthused investors.

In a bid to inject more liquidity into the economy, the People's Bank of China on Friday said it would slash the amount of cash lenders must keep in reserve to its lowest level in 12 years.

At the interbank foreign exchange the rupee opened at 71.72, then gained further ground and touched a high of 71.58, registering a rise of 14 paise over its previous close.

Rupee had settled at 71.72 against the US dollar on Friday.

Forex traders however said said weak opening in domestic equities weighed on the rupee.

Domestic bourses opened on a negative note on Monday with benchmark indices Sensex trading 129.77 points higher at 36,852.00 and Nifty up 31.90 points at 10,914.30.

Moreover, sustained foreign fund outflows and rising crude prices also dragged the local currency down.

Foreign institutional investors (FIIs) remained net sellers in the capital market, pulling out Rs 957.05 crore on Friday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, rose 0.96 per cent to trade at USD 62.13 per barrel.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.04 per cent to 98.43.

The 10-year government bond yield was at 6.59 per cent in morning trade.