The rupee fell 2 paise to all-time low of 84.87 against the US dollar in early trade on Wednesday, amid rising expectations of a shift in the Reserve Bank's monetary policy stance post the appointment of Sanjay Malhotra as the new RBI governor.

Forex traders said markets now expect a rate cut in the upcoming monetary policy in February. While a muted tone in the domestic market and the overall strength of the US dollar index further pressurised the rupee.

At the interbank foreign exchange, the rupee opened at 84.87, its all-time low against the greenback, registering a fall of 2 paise over its previous close.

On Tuesday, the rupee settled for the day on a flat note higher by just 1 paisa at 84.85 against the US dollar.

The Indian rupee opened at its lowest after the market expected the new RBI Governor to be dovish in his stance coming from the Finance Ministry and may cut rates as early as in February 2025, said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

The government on Monday appointed Revenue Secretary Sanjay Malhotra as the 26th Governor of the Reserve Bank of India.

Malhotra takes guard at a time when the Indian economy is faced with the dual challenge of slowing growth rate and high inflation.

While Shaktikanta Das kept benchmark interest rates unchanged for almost two years in a bid to control inflation, the incoming governor is said to be a team player who believes prices cannot be managed by the Reserve Bank of India (RBI) alone and the task needs government help as well.

The rupee was protected by RBI at 84.86 but opened lower and is expected to be in a range of 84.77 to 84.97 during the day, Bhansali said.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.07 per cent at 106.32.

Brent crude, the global oil benchmark, rose by 0.57 per cent to USD 72.61 per barrel in futures trade.

On the domestic equity market front, the 30-share benchmark index Sensex was trading 39.22 points, or 0.05 per cent lower, at 81,470.83 points. The Nifty fell 5.15 points, or 0.02 per cent, to 24,604.90 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth Rs 1,285.96 crore, according to exchange data.

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