Rupee falls 12 paise to fresh 16-month low against dollar

The rupee declined 12 paise to a fresh 16-month low of 68.12 against a strengthening US dollar in early trade today after China and the US struck a deal to avert a trade war.

Traders attributed the rupee's fall to increased demand for the dollar from importers and banks after US Treasury Secretary Steven Mnuchin said the trade war with China was on hold, amid hopes of easing trade tensions between the two economies.

Higher crude oil prices and losses in Asian currencies to weighed in the domestic unit, they added.

On Friday, the rupee had lost 30 paise to end at 68 against the US currency on renewed dollar buying interest amid global macro challenges.

Earlier, the benchmark BSE Sensex recovered 125.65 points, or 0.36 per cent, to 34,973.95 in early trade today. 

PSU, banking, metal, IT capital goods and teck indices rose by up to 0.43 per cent.
The NSE Nifty moved up by 25.30 points, or 0.23 per cent, to 10,621.70.

Support came from TCS, SBI, ICICI Bank, Bharti Airtel, ONGC, L&T, Tata Steel, IndusInd Bank, Adani Ports, Yes Bank, Power Grid, NTPC and HDFC Bank, which climbed by up to 2.05 per cent.

Meanwhile, foreign portfolio investors (FPIs) net sold shares worth Rs 166.15 crore, while domestic institutional investors (DIIs) bought equities to the tune of Rs 149.58 crore on Friday, as per provisional data.

On the domestic front, the political slugfest in Karnataka culminated with the BJP's B S Yeddyurappa quitting minutes before he was to face a floor test to prove his contested majority in the hung assembly. The JD(S)-Congress combine, led by the regional party's chief H D Kumaraswamy, is set to form the government in the state. 

Asian markets were higher in early trade. Hong Kong's Hang Seng was up 1.21 per cent while Japan's Nikkei rose 0.49 per cent. Shanghai Composite too was up 0.64 per cent.

The US Dow Jones Industrial Average ended flat on Friday.