MUMBAI: The rupee traded in a narrow range and fell 5 paise to 94.98 against the US dollar in early trade on Monday, weighed down by elevated crude oil prices and geopolitical tensions in the Middle East.
Forex traders said the rupee opened on a negative note on risk aversion in global markets amid escalation of tensions in the Middle East. However, softness in the US Dollar and US treasury yields cushioned the downside.
At the interbank foreign exchange market, the rupee opened at 94.92, then lost ground to touch 94.98, lower by 5 paise over its previous close.
On Friday, the rupee depreciated for the second consecutive day and fell 12 paise to close at 94.93 against the US dollar.
The Indian rupee opened slightly lower on elevated crude oil prices and geopolitical tensions in the Middle East. However, softness in the US Dollar and US treasury yields cushioned the downside," said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.
"We expect the rupee to trade with a slight negative bias on risk aversion in global markets amid escalation of tensions in the Middle East. Elevated crude oil prices and selling pressure by FIIs may also pressurise the rupee. However, weak US Dollar and any fresh intervention by the RBI may support the rupee at lower levels," Choudhary said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 101.49, lower by 0.15 per cent.
Brent crude, the global oil benchmark, was trading higher by 1.92 per cent at USD 114.48 per barrel in futures trade.
On the domestic equity market front, Sensex dropped 536.30 points to 72,583.86 in early trade; Nifty fell 200.10 points to 22,402.80.
Foreign Institutional Investors (FIIs) purchased equities worth Rs 887.65 crore on a net basis on Friday, according to exchange data.
Meanwhile, RBI data released on Friday showed India's forex reserves dropped by USD 5.011 billion to USD 721.016 billion during the week ended October 16. In the previous reporting week, the kitty declined by USD 8.578 billion to USD 726.027 billion.