MUMBAI, Aug 11: The rupee slipped 8 paise to 95.38 against the US dollar in early trading on Tuesday as uncertainty over the West Asia crisis kept investors cautious and pushed crude oil prices higher.
The domestic currency opened at 95.38 at the interbank foreign exchange market and remained around the same level during early trading. The rupee had closed 13 paise lower at 95.30 against the dollar on Monday.
Forex traders said weakness in domestic equities exerted pressure on the rupee, while foreign institutional investment and intervention by the Reserve Bank of India helped contain the decline.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said the rupee had remained within a narrow range on Monday despite Brent crude moving towards USD 84 a barrel. He attributed the limited downside partly to RBI intervention, with state-run banks reportedly selling dollars on behalf of the central bank.
Market sentiment remained cautious as uncertainty surrounding the Strait of Hormuz persisted amid the continuing tensions involving Iran and the United States. Bhansali said Brent crude had moved above USD 87 a barrel as expectations of an immediate resolution faded.
The dollar index, which measures the greenback against six major currencies, was trading 0.04 per cent lower at 99.77.
Brent crude, the global oil benchmark, was quoted at USD 87.67 a barrel in futures trading, down marginally by 0.06 per cent after rising sharply from around USD 84 on Monday.
Weakness in domestic stocks also weighed on investor sentiment. The Sensex declined 320.14 points to 78,204.40 in early trading, while the Nifty dropped 94.35 points to 24,490.85.
Despite the pressure on the currency, foreign institutional investors remained net buyers in the Indian equity market. Exchange data showed that FIIs purchased shares worth Rs 1,974.76 crore on a net basis on Monday.
Market participants are closely watching movements in crude prices, developments in West Asia and further central bank intervention for cues on the rupee’s direction.