The Indian rupee weakened against U.S. dollar in early trade on Monday, as persistent foreign-fund outflows weighed on investor sentiment.
A cheaper crude may support the local currency, forex traders said, but inflation and growth worries could cap the appreciation bias.
At the interbank foreign exchange, the rupee opened at 78.97 against the dollar, then fell to quote 79.03 -- a decline of 9 paise over previous close. The rupee-dollar exchange rate stood at 78.94 on Friday.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was at 105.14. Brent crude futures fell 0.08% to $111.54 per barrel.
"Today is a U.S. holiday therefore cash demand of $ will be absent. Maybe we could see some lower levels towards 78.80 for the pair," said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors. "Importers should take advantage of dips and buy their next 10-15 days of exposures. Exporters could sell the upticks towards 79.20 for near-term exposures."
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