Mumbai, Sep 1 (PTI) The rupee depreciated 17 paise to 88.26 against the US dollar in early trade on Monday, as persistent foreign fund outflows weighed on investor sentiments.

Forex traders said the rupee opened on a weaker note this morning and could remain under pressure as the tariffs from the US and outflows from FPIs weighed on the local unit.

At the interbank foreign exchange market, the rupee opened at 88.18, then lost ground and touched an early low of 88.26 against the US dollar, registering a decline of 17 paise over its previous close.

On Friday, the rupee breached the 88 per US dollar mark for the first time and had closed at an all-time low of 88.09 against the greenback.

The rupee hit an all-time intraday low of 88.31 last Friday after the RBI allowed it to go past 87.80, a level it had been protecting since the last six months and 87.95, its previous all-time low, said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

The 50 per cent Tariffs will surely hurt the portfolio inflows while India continues to talk with the US on the trade and Tariffs issues, he said.

The seriousness of the issue could be gauged from the impact on growth and widening trade deficit, even though GDP grew by 7.8 per cent in the first quarter of the fiscal year. Going forward, we could see some slowdown in the second quarter due to spillovers from the tariffs' impact.

Government data released on Friday showed India's economy grew by a stronger-than-expected 7.8 per cent in April-June, its fastest pace in five quarters.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.07 per cent to 97.70.

Brent crude, the global oil benchmark, was trading 0.41 per cent lower to USD 67.20 per barrel in futures trade, On the domestic equity market front, Sensex climbed 343.46 points to 80,153.11 in early trade, while the Nifty was up 105.8 points to 24,532.65.

Foreign Institutional Investors offloaded equities worth Rs 8,312.66 crore on Friday, according to exchange data.

The RBI on Friday said the country's forex reserves dropped USD 4.386 billion to USD 690.72 billion during the week ended August 22. The overall reserves had jumped from USD 1.488 billion to USD 695.106 billion in the previous reporting week.

The Forex reserves fell as RBI continued to sell dollars to protect the rupee, Bhansali said, adding that "the RBI could allow depreciation of the rupee to maintain its competitiveness against other countries where tariffs are lower than India." PTI DRR DR DR

Currency depreciation pressures prompt central bank dollar sales and potential managed weakening to preserve trade competitiveness. Rupee weakness was driven by portfolio outflows and tariff-related trade concerns, prompting the Reserve Bank of India to sell dollars and permit managed depreciation to maintain external competitiveness, a response that coincided with a decline in forex reserves.