New Delhi: The Indian rupee fell 5 paise to 94.98 against the US dollar in early trade on Monday, as higher crude oil prices and geopolitical tensions in the Middle East weighed on the domestic currency.
The rupee opened at 94.92 at the interbank foreign exchange market before slipping to 94.98. It had closed at 94.93 against the dollar on Friday, after losing 12 paise in the previous session.
Forex market analysts attributed the pressure to risk aversion in global markets amid escalating tensions in the Middle East. However, a softer US dollar and lower US Treasury yields helped limit the rupee's decline.
Crude Oil Prices Add to Pressure
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee opened lower amid higher crude oil prices and geopolitical uncertainty, though weakness in the US dollar and Treasury yields provided some support.
Choudhary expects the currency to maintain a slight negative bias in the near term. Elevated oil prices and selling by foreign institutional investors (FIIs) could add to the pressure, while possible Reserve Bank of India (RBI) intervention may help support the rupee at lower levels.
Brent crude, the global oil benchmark, was trading 1.92% higher at USD 114.48 per barrel in futures trade.
Dollar Index Slips
The dollar index, which measures the US currency against a basket of six major currencies, was trading 0.15% lower at 101.49. The decline offered some relief to the rupee amid broader market uncertainty.
Domestic equities also opened lower on Monday. The Sensex dropped 536.30 points to 72,583.86, while the Nifty fell 200.10 points to 22,402.80.
FIIs, however, were net buyers of Indian equities on Friday, purchasing shares worth Rs 887.65 crore, according to exchange data.
Forex Reserves Decline
Separately, RBI data released on Friday showed that India's foreign exchange reserves fell by USD 5.011 billion to USD 721.016 billion in the week ended 16 October.
Reserves had declined by a larger USD 8.578 billion in the preceding week, taking the total to USD 726.027 billion.
