The rupee on Friday declined by 26 paise to 69.32 against the US currency in early trade, due to strong dollar demand from banks and importers amid unabated foreign fund outflows.
Forex traders said market sentiment took a hit after the US announced additional 10 per cent tariff on USD 300 billion in Chinese goods.
President Donald Trump on Thursday announced that the US will impose an additional 10 per cent tariff on USD 300 billion in Chinese imports, and accused China of not being serious in arriving at the trade deal and failing to keep its promise to buy more American agricultural products.
In a series of tweet, Trump said the new tariff, in addition to the 25 per cent on goods worth USD 250 billion that was previously in place, would come into effect from September 1.
At the Interbank Foreign Exchange, the rupee opened at 69.26 then fell to 69.32 against the US dollar, showing a decline of 26 paise over its previous closing.
The Indian rupee on Thursday had closed at 69.06 against the US dollar.
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Traders said strengthening of the greenback vis-a-vis other currencies overseas, weak opening in domestic equities and foreign fund outflows also weighed on the local unit.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 1,056.55 crore on Thursday, provisional data with the exchanges showed.
The 30-share index was trading 330.96 points or 0.89 per cent lower at 36,687.36 and the broader Nifty fell 101.65 points or 0.93 per cent to 10,878.35.
The dollar index, which gauges the greenback's strength against a basket of six currencies, inched up 0.05 per cent to 98.41.
Brent crude futures, the global oil benchmark, climbed 2.51 per cent to USD 62.02 per barrel.
The 10-year government bond yield was at 6.33 per cent in morning trade.