The rupee slumped 23 paise to 83.09 (provisional) against the US dollar on Tuesday, as a strong greenback against major rivals overseas and negative equity market dented investor sentiment.
Besides, volatile crude oil prices in the international markets weighed on the domestic currency, forex traders said.
At the interbank foreign exchange, the domestic currency opened at 82.95 and traded in the range of 82.92 to 83.09 against the greenback during intra-day.
The unit finally settled at 83.09 (provisional) against the dollar, registering a loss of 23 paise from its previous close.
On Monday, the rupee settled with a gain of 9 paise at 82.86 against the US dollar. This was the ninth consecutive day of gain for the Indian currency.
Advertisement
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the rupee depreciated on the strong dollar and weak domestic markets. "A rise in crude oil prices also put downside pressure on the rupee. However, favourable macroeconomic data prevented a sharp fall in the rupee."
Meanwhile, the US dollar gained on safe-haven demands amid concern over disruption in global trade through the Red Sea route.
Choudhary said the rupee is expected to "trade with a slight negative bias on risk aversion in the global markets amid escalating geopolitical tensions in the Middle East.
"USD-INR spot price is expected to trade in a range of Rs 82.60 to Rs 83.40."
Advertisement
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.78 per cent higher at 102.95 on Tuesday.
Brent crude futures, the global oil benchmark, increased 0.67 per cent to USD 78.67 per barrel.
On the domestic equity market front, Sensex fell 199.17 points, or 0.27 per cent, to settle at 73,128.77 points. The Nifty declined 65.15 points, or 0.29 per cent, to 22,032.30 points.
Foreign Institutional Investors (FIIs) were net buyers in the equity market on Monday as they bought shares worth Rs 1,085.72 crore, according to exchange data.
Just one email a week