Mumbai, March 24 The rupee fell by 35 paise to 93.88 (provisional) against the US dollar on Tuesday as a strengthening dollar against major currencies and high global crude prices spooked investors.
Further outflows of foreign funds amid uncertainty over the West Asia crisis also weighed on the local currency, forex traders said.
At the interbank foreign exchange market, the local currency opened at 93.66 against the dollar and remained volatile throughout the session. It eventually settled at 93.88 (provisional), down 35 paise from its previous close.
The rupee breached the 94-level against the US dollar for the first time on Monday, before closing flat at 93.53.
"Persistent outflows of foreign funds continue to put pressure on the INR. A strong US dollar is keeping emerging market currencies weak, and the INR has weakened by about 4.5 per cent during the month. The expected range for the rupee on Wednesday is 93.65 to 94.25," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
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 the 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 and continued hostilities in the region created uncertainty, pushing up global crude oil prices.
The dollar index, which gauges the strength of the dollar against a basket of six currencies, was trading 0.23 per cent higher at 99.18.
Brent crude, the global oil benchmark, was trading 1.45 per cent lower at USD 101.4 per barrel in futures trade.
On the domestic equity market front, the Sensex rose sharply by 1,372.06 points, or 1.89 per cent, to 74,068.45, while the Nifty was up 209.65 points, or 0.93 per cent, to 22,722.30.
Foreign institutional investors sold equities worth Rs 10,414.23 crore on a net basis on Monday, according to exchange data.