The rupee declined 4 paise to 96.39 against the U.S. dollar in early trade on Tuesday (October 6, 2026) over a rise in crude oil prices and sustained FII outflows.

However, positive sentiment in domestic equity markets and a weaker dollar index cushioned the local unit from further decline, forex traders said.

Also Read: Why is the Indian rupee falling?

At the interbank foreign exchange, the rupee opened at 96.29 but fell to 96.39, down 4 paise from its previous close.

The rupee depreciated 10 paise to close at 96.35 against the U.S. dollar on Monday (October 6).

“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,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

The Reserve Bank’s Monetary Policy Committee began its three-day meeting on Monday (October 5) and is likely to raise rates by 25 basis points, aligning with central banks’ hawkish stance amid escalating conflict in West Asia, which poses risks to domestic inflation.

The last repo rate hike was in February 2023, when the RBI raised the rate by 0.25% to 6.50%. It kept the rate unchanged through 2023-24 before beginning its rate-cut cycle in 2025. Currently, the RBI’s policy repo rate stands at 5.25%.

Meanwhile, the dollar index, which gauges the strength of the greenback against a basket of six currencies, was trading at 102.12, lower by 0.04%.

Brent crude, the global oil benchmark, was trading higher by 0.23% at $100.6 per barrel in futures trade.

On the domestic equity market front, Sensex advanced 120.22 points to 72,535.41 in early trade, while Nifty also rose 47.15 points to 22,603.10.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹4,699.14 crore on a net basis on Monday (October 5), according to exchange data.