The Indian rupee slid 11 paise on Tuesday to finish provisionally at 94.74 against the US dollar. A strong greenback combined with downward pressure in domestic stock markets dragged the local unit down.
Forex traders noted that softening international crude oil prices prevented a steeper fall for the domestic currency.
At the interbank foreign exchange, the currency started the session at 94.73 before fluctuating between an intraday high of 94.63 and a low of 94.92, eventually wrapping up 11 paise lower than its previous close.
The rupee depreciated 30 paise to close at 94.63 against the US dollar on Monday.
"The rupee declined on firm US dollar and weak domestic markets. Importer demand for hedging also weighed on the domestic currency. However, falling crude oil prices and softening of US treasury yields cushioned the downside. US waiver on sanctions on Iranian oil has led to a sharp fall in oil prices," Anuj Choudhary, Research analyst at Mirae asset ShareKhan, said.
"We expect the rupee to trade with a negative bias on strengthening of the US dollar amid hawkish Fed and weak global markets," he said.
Also read: Rupee falls 34 paise, closes at 94.67 against US dollar
V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, said, "Rupee is likely to trade in a range of 94.60 to 94.95 in the near term. The future trend will be influenced significantly by the data regarding FCNR B deposits being mobilised by commercial banks. If this scheme succeeds in mobilising a big amount, as many people believe, the rupee can appreciate over a period, assisted by the low crude prices." As things stand, there is no risk of significant depreciation of the rupee, Vijayakumar added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 101.09, up 0.07 per cent, amid hawkish Fed and the fragile US-Iran trade deal.
Brent crude, the global oil benchmark, was trading lower by 0.54 per cent at USD 77.48 per barrel in futures trade.
On the domestic equity market front, Sensex tanked 893.39 points, or 1.16 per cent, to 76,200.68, while the Nifty fell 278.80 points, or 1.16 per cent, to 23,824.10.
Foreign institutional investors offloaded equities worth Rs 635.91 crore on a net basis on Monday, according to exchange data.
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