Rupee falls 20 paise to 93.73 against US dollar in early trade

Mumbai: The rupee fell 20 paise to 93.73 against the US dollar in early trade on Tuesday as the greenback strengthened and global crude oil prices kept rising even after US President Donald Trump signalled that negotiations were underway with Iran.

Trump on Monday said the US was talking with a "respected" Iranian leader and claimed the Islamic Republic was eager for a deal to end the war. He also extended a deadline for Iran to reopen the crucial Strait of Hormuz or face attacks on its power plants, saying it has an additional five days.

However, Iran's denial of Trump's claims created uncertainty, pushing up global crude oil prices.

Heavy FII outflows further weighed on the local unit while a strong start in trading at the domestic equity markets cushioned against sharper losses, forex traders said.

At the interbank foreign exchange, the local unit opened at 93.66 against the greenback before slipping to 93.73, down 20 paise from its previous close.

"The rupee which fell to its lowest yesterday at 93.98 (some trade did happen above 94.00 levels also) recovered after Trump said he is postponing his strike on power plants of Iran by five days after talks with Iran, which Iran denied but still market believed in him and rallied," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

"The rupee has been vulnerable due to the rise in oil prices. RBI was present around 93.95 to 93.98 levels and may be present today to keep a tab on the rupee which continues to be vulnerable," he added.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.42 per cent higher at 99.36.

Brent crude, the global oil benchmark, was trading 3.96 per cent lower at USD 103.9 per barrel in futures trade.

On the domestic equity market front, the Sensex rose 829.40 points, or 1.14 per cent, to 73,525.79, while Nifty was up 234.65 points, or 1.04 per cent, to 22,747.30 in morning session.

Foreign institutional investors sold equities worth Rs 10,414.23 crore on a net basis on Monday, according to exchange data.