The rupee fell 10 paise to 66.68 against the US dollar in early trade on Tuesday, following a rally in the greenback overnight amid speculation over a Fed rate hike and reversal of key technical supports.

The domestic currency had depreciated 4 paise to 66.58 against the US currency in the previous session on fag-end dollar demand from banks and importers.

The dollar index, which tracks the movement of dollar against a basket of six major world currencies, rose 0.07 per cent to 94.20.
Most Asian currencies fell. The Malaysian ringgit plunged 0.96 per cent to 4.05. The Korean won, the Indonesian rupiah and the Taiwanese dollar dropped 0.66 per cent, 0.34 per cent and 0.25 per cent, respectively. The Japanese yen inched 0.07 per cent lower at 108.40.

Yen declined after the Japanese Finance Minister Taro Aso on Monday said that Japan is determined to prevent recent ‘one-sided’ yen rises and keep the currency from accelerating, reiterating his resolve to intervene in the currency market if yen gains last long enough to hurt a fragile economic recovery, Reuters reported.

So far, the rupee with a 0.65 per cent fall has been the worst-performing currency this year. The Chinese yuan has fallen 0.42 per cent, while the Japanese yen has appreciated 10.98 per cent during the period.

“Mixed signals from major global economies and swings in crude oil prices are likely to keep the rupee in a range. The medium-term outlook of rupee will hinge on global developments, while earnings and flows’ position is likely to dictate the near-term range. A protracted recovery in corporate earnings is likely to keep flows to Indian markets subdued,” said India Ratings in a note.