The rupee fell 18 paise lower to 71.62 in early trade on Tuesday against its previous close amid worries of economic slowdown, rising crude oil prices and unabated foreign fund outflows. On Monday, the rupee had tumbled 29 paise to close at an over six-month low of 71.43 against the American currency due to growing worries over the economic slump.
Later, the local currency fell 24 paise to 71.67 against the US dollar to over six-month low at the Interbank Foreign Exchange.
As per market participants, cautious opening in domestic equities, rising crude oil prices and foreign fund outflows weighed on the local unit, coupled with Foreign institutional investors (FIIs) remaining net sellers in the capital markets.
According to provisional exchange data, the net investment of equity and debt reported by foreign portfolio investors (FPIs) remained bearish with net selling logged at Rs 305.74 crore from Indian equities while domestic institutional investors (DIIs) bought Rs 386.23 crore on Monday.
Forex traders said investors are awaiting government intervention to revive the slowing economy. There are expectations that the government would come out with sector-specific stimulus sometime soon.
Meanwhile, on the equity market front, local bourses opened marginally lower on Tuesday and later traded on a major bearish trend, despite positive Asian markets on hopes Federal Reserve would continue to cut interest rates to push economic growth.
Benchmark indices Sensex opened 46.13 points higher at 37,448.62 and Nifty up by 12.55 points at 11,066.45. Although later, domestic indices pared all initial gains with BSE Sensex falling over 100 points and Nifty touching 10,990 mark.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.03 per cent to 98.31.
The 10-year government bond yield was at 6.61 per cent in morning trade.
Traders said this week the focus will be on the Reserve Bank of India (RBI), Federal Open Market Committee (FOMC) and European Central Bank (ECB) minutes, the annual Jackson Hole Symposium of central bankers and Fed chair Powell's speech, among others.
Brent crude futures, the global oil benchmark, rose 0.07 per cent to 59.78 per barrel.
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