Mumbai, March 24 The rupee fell by 20 paise to 93.73 against the US dollar in early trading on Tuesday as the greenback strengthened and global crude oil prices continued to rise even after US President Donald Trump signaled that negotiations were underway with Iran.
Trump said on Monday that the US was talking with a "respected" Iranian leader and claimed that 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 had 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 trading also happened above 94.00 levels), recovered after Trump said he was postponing his strike on Iran's power plants by five days after talks with Iran, which Iran denied but the market still believed in him and rallied," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
"The rupee has been vulnerable due to rising oil prices. The RBI was present around 93.95 to 93.98 levels and may be present today to keep a close watch 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 by 829.40 points, or 1.14 per cent, to 73,525.79, while Nifty was up by 234.65 points, or 1.04 per cent, to 22,747.30 in the morning session.
Foreign institutional investors sold equities worth Rs 10,414.23 crore on a net basis on Monday, according to exchange data.