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Rupee depreciated 8 paise to 83.95 against the US dollar in morning trade on Tuesday, weighed down by elevated crude oil prices and a muted trend in domestic equities.
Forex traders said Brent Crude, the international benchmark, was trading above the $80 per barrel mark, as fighting continued in the Middle East and attacks by Russia over Ukraine also increased geopolitical tensions.
At the interbank foreign exchange market, the local unit opened at 83.91, then lost further ground and touched 83.95, registering a loss of 8 paise from its previous close.
On Monday, the Indian rupee settled for the day 3 paise higher at 83.87 against the American currency.
Asian currencies fell after appreciating on Monday. The Indian rupee opened at 83.91 and is expected to trade in a small range of 83.85/95, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
According to CR Forex Advisors' Amit Pabari with the Reserve Bank firmly in control, the rupee is likely to remain within a narrow range.
"The Reserve Bank of India has been actively intervening in the market, consistently absorbing inflows and preventing the rupee from reaching what many consider its fair value," Pabari said.
He further noted that this strategy has also contributed to a nearly $5 billion increase in India's forex reserves, providing a buffer against potential currency shocks.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, gained 0.04 per cent to 100.89 points.
Brent crude was 0.23 per cent down at $81.24 per barrel in futures trade, as escalations in tensions in the Middle East took oil prices higher.
In the domestic equity market, the 30-share BSE Sensex fell 76.99 points, or 0.09 per cent, to 81,621.12 points, while the Nifty was down by 27.75 points, or 0.11 per cent, to 24,982.85 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Monday, as they purchased shares worth ₹483.36 crore, according to exchange data.
- Also read: How the Japanese yen will carry the trade
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