The Indian rupee weakened in early trade on Tuesday, declining 17 paise to open at 95.43 against the US dollar in the interbank foreign exchange market. This drop came from Monday's closing level of 95.26, driven by persistent demand for the US dollar and a recovery in crude oil prices.
The rupee had ended the previous session 34 paise stronger, supported by the Reserve Bank of India's intervention through dollar sales, which helped the currency recover from earlier losses.
Market participants noted that geopolitical developments continue to influence the rupee's movement, while liquidity measures and RBI intervention may help limit sharp fluctuations in the near term.
Crude oil prices edged higher after reports of fresh US attacks against Iran dampened expectations of progress toward reopening the Strait of Hormuz. Brent crude futures, which had fallen earlier on Monday, climbed 1.84% to $97.91 per barrel after touching the $93 per barrel mark.
Earlier, US President Donald Trump stated that talks with Iran aimed at ending the war were moving "nicely." However, officials indicated that reaching a final agreement could take time due to Tehran's complex consultation process 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 the rupee firmer against the dollar," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP. He added, "Reports on Monday evening indicated that the 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."
The dollar index, which tracks the US currency against six major peers, was trading 0.19% lower at 99.04.
Domestic equities also opened in the red, with the Sensex declining 264.82 points to 76,224.14, while the Nifty dropped 27.6 points to 24,004.10.
