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The rupee depreciated 17 paise to 93.07 against the US dollar in early trade on Tuesday, weighed down by unabated withdrawal of foreign capital, a firm dollar, and higher crude oil prices amid a volatile geopolitical situation.

Forex traders said the USD/INR pair remains vulnerable to any flare-up in the US-Iran conflict, which in turn would push crude oil prices further.

At the interbank foreign exchange market, the rupee opened at 93.05 against the US dollar, then lost ground to trade at 93.07, registering a fall of 17 paise from its previous close.

On Monday, the rupee gained 28 paise to close at 92.90 against the US dollar on Monday, following the Reserve Bank's measures to curb speculative fervour and dampen volatility in the Indian currency.

The RBI has tightened its rules to curb speculative positions and capped banks' net open positions at USD 100 million.

"The recent actions by the Reserve Bank of India have clearly played a stabilising role. The central bank has managed to pull the rupee away from extreme weakness, anchoring it closer to its strength zone," CR Forex Advisors MD Amit Pabari said, adding that "underlying pressures continue to build beneath the surface".

"Crude oil prices have remained elevated above USD 100 per barrel, and that is where the pressure truly begins. For an oil-importing nation like India, higher crude directly translates into a widening Current Account Deficit (CAD). At the same time, foreign investors have pulled out nearly USD 16 billion from Indian markets this year, reflecting a broader risk-off sentiment," Pabari said.

Meanwhile, US President Donald Trump's deadline for the opening of the Strait of Hormuz expires today, with Iran still not relenting on the ceasefire proposal as they have set their own terms and conditions for the same.

The rupee is likely to remain range-bound with a bit of volatility between 92.50 and 93.50 as the markets await the RBI's monetary policy.

The Reserve Bank's rate-setting panel on Monday started its three-day brainstorming session on the first bi-monthly monetary policy of the fiscal year. The decision of the six-member Monetary Policy Committee (MPC), headed by Reserve Bank Governor Sanjay Malhotra, will be announced on Wednesday.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was up 0.13 per cent at 100.11.

Brent crude, the global oil benchmark, was trading higher by 1.22 per cent at USD 111.11 per barrel in futures trade.

On the domestic equity market front, the 30-share benchmark index Sensex tumbled 824.44 points to 73,282.41 in early trade, while the Nifty dropped 248.95 points to 22,719.30.

Foreign Institutional Investors offloaded equities worth Rs 8,167.17 crore on Monday, according to exchange data. 

(Disclaimer: This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)