Rupee declines 6 paise to 83.45 against US dollar in early trade today

The rupee depreciated 6 paise to 83.45 against the US dollar in early trade on Friday, as market participants remained cautious ahead of the announcement of the Reserve Bank of India's rate-setting panel's decision.

Forex traders said the local unit was also weighed down by a strong American currency and elevated crude oil prices. Moreover, a negative trend in domestic equities and sustained foreign fund outflows also dented investor sentiments.

According to interbank foreign exchange, the rupee opened at 83.44 against the dollar and touched a low of 83.45 in the initial trade, registering a fall of 6 paise over its previous close.

On Thursday, the rupee recovered 14 paise to close at 83.39 against the US dollar.

Traders said market participants are awaiting the RBI MPC policy decision for further cues. The Reserve Bank's rate-setting panel on Wednesday started its three-day deliberations on the next set of monetary policy.

The decision taken at the meeting of the Reserve Bank Governor Shaktikanta Das-headed Monetary Policy Committee (MPC) is scheduled to be announced later in the day.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 104.33, higher by 0.20 per cent.

Brent crude futures, the global oil benchmark, rose 0.40 per cent to USD 91.01 per barrel.

Forex traders said the rupee is likely to trade with a slight negative bias on the surge in crude oil and gold prices. Renewed geopolitical tensions in the Middle East and selling pressure from FIIs may also weigh on the rupee.

On the domestic equity market, the 30-share BSE Sensex was trading 107.27 points, or 0.14 per cent lower at 74,120.36 points. The broader NSE Nifty was down 50.05 points, or 0.22 per cent, to 22,464.60 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 1,136.47 crore, according to exchange data.

On the domestic macroeconomic front, India's services sector witnessed one of the strongest growth rates in over 13-and-a-half years in March on the back of strong demand that spurred sales and business activity.