The Indian rupee depreciated in early trade on Tuesday, weighed down by fragile market sentiment following renewed military tensions in the Gulf region.
The currency opened weaker at the interbank foreign exchange market and slipped further to trade around 95.43 against the US dollar, marking a decline of about 20 paise from its previous close. The fall comes a day after the rupee had already hit a record low.
Traders said investor nervousness has intensified amid escalating exchanges between the United States and Iran, prompting a shift towards safe-haven assets. The US dollar has strengthened as a result, adding pressure on emerging market currencies, including the rupee.
Rising crude oil prices have compounded the strain. Brent crude was hovering near $113 per barrel, keeping concerns alive for oil-importing economies such as India, where higher import bills tend to weaken the domestic currency.
Market experts noted that a combination of elevated oil prices and a stronger dollar index is likely to keep the rupee under pressure in the near term. Increased demand for dollars from oil companies and foreign portfolio investors has further contributed to the currency’s decline.
The dollar index, which tracks the strength of the US currency against a basket of major peers, edged higher in early trade, reflecting continued global risk aversion.
Domestic equity markets also mirrored the cautious mood. Benchmark indices opened lower, with both the Sensex and Nifty slipping in early deals as investors reacted to geopolitical uncertainty and currency weakness.
Despite the broader volatility, foreign institutional investors were net buyers in the previous session, offering some support to the market.
Analysts said the outlook for the rupee will remain closely tied to developments in the Gulf, particularly around key oil supply routes, as well as movements in global crude prices and the US dollar.
With PTI inputs
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