Mumbai, Jan 2 (PTI) The rupee dropped 11 paise to 85.75 against the US dollar in early trade on Thursday, weighed down by the significant uptrend in the dollar index and US 10-year bond yields.

Forex traders said the dollar gained against most currencies during the year 2024 and continued to remain on a strong footing this year. Moreover, persistent foreign fund outflows further dented investors' sentiments.

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Additionally, global markets are expected to see low volumes as the holiday season is underway in major economies like the UK and Europe.

At the interbank foreign exchange, the rupee opened at 85.69 then fell further to 85.75 against the American currency, registering a fall of 11 paise over its previous close.

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On Wednesday, the rupee settled flat at 85.64 against the US dollar.

On December 27, the local currency touched its lifetime intraday low of 85.80 against the greenback.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 108.32, down 0.15 per cent. The US dollar index has stayed well supported, consolidating around 108 mark over the last few sessions.

The market will keep its focus on Donald Trump's policies which could boost growth but could also increase price pressures and this would keep the US FED on a hold for longer on interest rate cuts, Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP said.

"The range for the day is expected between 85.50/80. A close watch on the liquidity position should be made as premiums in near-term remain on the higher side," Bhansali noted.

Brent crude, the global oil benchmark, was quoted 0.44 per cent higher at USD 74.97 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex was trading 270.48 points or 0.34 per cent up at 78,777.89 points in morning trade, while Nifty was higher by 85.15 points or 0.36 per cent to 23,828.05 points.

Foreign Institutional Investors (FIIs) offloaded Rs 1,782.71 crore in the capital markets on net basis on Wednesday, according to exchange data.

On the domestic macroeconomic front, the total gross Goods and Services Tax (GST) revenue grew 7.3 per cent to Rs 1.77 lakh crore in December as compared to Rs 1.65 lakh crore in the same month a year ago.

In November, GST mop-up was Rs 1.82 lakh crore with 8.5 per cent annual growth. The highest-ever collection was in April 2024 at over Rs 2.10 lakh crore. PTI

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