Rupee weakens against US dollar amid firm greenback and oil price volatility

The Indian rupee edged lower in early trade on Tuesday, pressured by a strengthening US dollar and continued volatility in global oil prices amid uncertainty over developments in West Asia.

The local currency fell by 20 paise to trade at 93.73 against the US dollar in the interbank foreign exchange market. It had opened slightly stronger at 93.66 before losing ground as the session progressed.

Market sentiment remained cautious despite remarks by Donald Trump suggesting that diplomatic engagement with Iran was under way. He indicated that the United States had held discussions with an Iranian leader and extended a deadline for Tehran to reopen the strategically vital Strait of Hormuz, warning of possible strikes on energy infrastructure if demands were not met.

However, Iran rejected claims of any ongoing negotiations, adding to market uncertainty and contributing to fluctuations in crude oil prices.

Currency traders noted that sustained foreign institutional investor (FII) outflows further weighed on the rupee, although gains in domestic equity markets helped limit sharper losses.

According to market participants, the rupee had touched record low levels in the previous session before recovering slightly after expectations of a pause in hostilities briefly lifted sentiment.

The Reserve Bank of India was seen intervening near the 93.95–93.98 range to stabilise the currency, traders said, and may continue to monitor volatility closely.

The dollar index, which measures the strength of the US currency against a basket of major peers, was trading higher at 99.36, reflecting broader global demand for the greenback.

Meanwhile, Brent crude, the international oil benchmark, remained elevated, trading near $104 per barrel in futures markets, keeping pressure on oil-importing economies such as India.

On the domestic equities front, markets opened on a strong note. The BSE Sensex rose over 800 points in early deals, while the Nifty 50 gained more than 1 per cent, offering some support to the rupee.

Exchange data showed that foreign institutional investors had remained net sellers, offloading equities worth over Rs 10,400 crore in the previous session, adding to downward pressure on the currency.

Analysts said the rupee is likely to remain sensitive to movements in crude oil prices and global risk sentiment, with geopolitical developments continuing to drive near-term direction.

With PTI inputs