Rupee slips 4 paise to 96.39 against U.S. dollar in early trade

The rupee weakened by 4 paise to 96.39 against the U.S. dollar in early trade on Tuesday, October 6, 2026, pressured by higher crude oil prices and continued foreign portfolio outflows. The downside was limited by gains in domestic equities and a softer dollar index, according to forex traders.

Early moves and previous close

At the interbank foreign exchange market, the local unit opened at 96.29 before easing to 96.39 against the greenback, down 4 paise from its previous close. The rupee had already slipped 10 paise to settle at 96.35 on Monday.

Oil, flows and market drivers

Analysts pointed to elevated crude prices and persistent foreign portfolio investor (FPI) demand for dollars as key headwinds for the currency, even as broader risk sentiment improved. Brent crude futures, the global oil benchmark, were trading 0.23% higher at $100.6 per barrel in early deals.

Foreign Institutional Investors offloaded domestic equities worth ₹4,699.14 crore on a net basis on Monday, exchange data showed, adding to pressure on the rupee through higher demand for U.S. dollars.

“The Reserve Bank has been protecting the rupee from its fall at 96.33, but the demand for the dollar from FPIs and oil companies has not come down despite oil falling to $100.63 per barrel and the dollar index to 102.12,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

Global cues and equities

The dollar index, which measures the greenback’s strength against a basket of six major currencies, edged lower by 0.04% to 102.12, offering some support to emerging market currencies including the rupee.

On the domestic equities front, benchmarks advanced in early trade: the Sensex gained 120.22 points to 72,535.41, while the Nifty rose 47.15 points to 22,603.10. The improvement in risk appetite helped temper the rupee’s decline, traders said.

Policy backdrop: RBI in focus

The Reserve Bank of India’s Monetary Policy Committee began its three-day meeting on Monday and is widely expected to raise the policy rate by 25 basis points, mirroring the hawkish stance of global central banks. The escalation of conflict in West Asia has heightened risks to domestic inflation, strengthening the case for a policy response.

The RBI last raised the repo rate in February 2023 by 0.25 percentage points to 6.50%. It then kept rates unchanged through the 2023–24 period before beginning an easing cycle in 2025. The policy repo rate currently stands at 5.25%.

Outlook

Currency traders are watching the RBI policy outcome and guidance for cues on inflation and liquidity, while tracking oil price dynamics and foreign fund flows. A softer dollar and firm domestic equities may continue to cushion the rupee; however, elevated crude and sustained dollar demand from FPIs and oil companies remain key risks in the near term.