Mumbai: The Indian rupee weakened by four paise to Rs 95.74 against the US dollar in early trade on Tuesday. The domestic currency remained under pressure from higher crude oil prices and increasing demand for the dollar from importers.
According to forex traders, continuous intervention by the Reserve Bank of India (RBI) through public sector banks helped limit the rupee's decline. Despite weakness in Asian stock markets and increasing geopolitical uncertainty to Iran, the rupee continued to trade in a narrow range.
Rupee had closed at 95.70 on Monday
The rupee opened at 95.74 per dollar in the interbank foreign exchange market. Earlier on Monday, the domestic currency had closed at Rs 95.70 per dollar with a slight gain of one paise against the US dollar.
In Tuesday's early trade, the movement of the rupee was influenced by global market signals and demand for the dollar.
Slight rise in dollar index also
The dollar index, which measures the strength of the US dollar against six major world currencies, rose 0.04 percent to 99.04.
Demand for safe investments increased among investors after the increase in US sanctions on Iran, which supported the dollar. However, the dollar remains under some pressure due to expectations of repurchase of US government bonds.
Crude oil price crosses $92
There was also a rise in the prices of crude oil in the international market. Brent crude oil futures rose 0.30 percent to $ 92.45 per barrel.
India imports a major part of its crude oil needs. In such a situation, increase in oil prices in the international market may increase the demand for dollars, which will impact the value of rupee.
Sensex and Nifty also weak in early trade
There was weakness in the domestic stock market also in early trading on Tuesday. The Sensex fell 30 points to 77,336.32, while the Nifty was trading 38.80 points lower at 24,179.50.
However, buying in the Indian stock market by foreign investors continued. According to stock market data, foreign institutional investors (FIIs) made net purchases of shares worth Rs 1,181.66 crore on Monday.
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