Mumbai, May 26 (PTI) The rupee fell 17 paise to 95.43 against US dollar in early trade on Tuesday, as month-end dollar demand and elevated crude oil prices weighed on investor sentiments.
Forex traders said the broader pressure on the rupee is likely to continue as long as geopolitical tensions remain elevated. Moreover, RBI measures and liquidity support may help provide temporary relief and contain volatility in the near term, they said.
At the interbank foreign exchange market, the rupee opened at 95.43 against the US dollar, down 17 paise from its previous close.
On Monday, the rupee gained 34 paise to close at 95.26 against the US dollar with the RBI selling dollars and keeping the rupee well bid at all upper levels.
Meanwhile, Brent oil prices rose after they touched USD 93 per barrel with reports of fresh attacks against Iran offsetting hopes of a deal to reopen Strait of Hormuz.
US President Donald Trump on Monday said negotiations with Iran to end the war were progressing “nicely”, but officials pointed out that a final decision may take some time due to the complex communication networks Tehran deploys to consult with its supreme leader.
“With RBI on the prowl the speculative pressure against the rupee has come down significantly and a better risk appetite in equities has kept rupee firmer against the dollar,” said Anil Kumar Bhansali Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.04, down 0.19 per cent.
Brent crude, the global oil benchmark, was trading up 1.84 per cent USD 97.91 per barrel in futures trade.
Brent oil moved up after a fall on Monday after reports that US had carried fresh attacks against Iran offsetting hopes of a deal to reopen the Strait of Hormuz.
“Reports on Monday evening indicated that US had launched fresh strikes against missile launch sites and mine laying boats taking oil a bit higher despite talks being held with Iranian authorities. This could complicate the ongoing peace negotiations,” Bhansali said.
On the domestic equity market front, Sensex declined 264.82 points to 76,224.14 in opening trade, while the Nifty dipped 27.6 points to 24,004.10.
Foreign institutional investors turned net buyers and purchased equities worth Rs 821.75 crore on Monday, according to exchange data.
