Mumbai, March 2 The rupee depreciated by 21 paise to 91.29 against the US dollar on Monday, amid higher crude oil prices, a strong US dollar, and intense global volatility due to escalating tensions in the Middle East.
Negative sentiment in the equity market and the massive withdrawal of foreign funds also weighed on the Indian currency, forex traders said.
At the interbank foreign exchange market, the rupee opened at 91.23 and further declined to 91.29 against the dollar in initial trading, down 21 paise from its previous closing level.
On Friday, the rupee had lost 17 paise to settle at 91.08 against the dollar.
Meanwhile, the dollar index, which gauges the strength of the dollar against a basket of six currencies, was trading at 97.78, up 0.22 per cent.
Brent crude, the global oil benchmark, was up 3.91 per cent at $76.78 per barrel in futures trade.
Analysts said that crude prices soared after the US and Israel launched military strikes against Iran.
In the latest strikes, US and Israeli forces targeted various locations in Iran on Sunday, dropping massive bombs on the country's ballistic missile sites and sinking warships. The attacks were intensified after the killing of Iran's Supreme Leader, Ayatollah Ali Khamenei.
Experts say that India faces the risk of a sharp increase in its import bill due to rising crude prices in the international market, as the country meets 85 per cent of its fuel requirements through imports.
On the domestic equity market front, the Sensex tumbled by 691.47 points or 0.85 per cent to 80,595.72, while the Nifty fell by 240.95 points or 0.96 per cent to 24,937.70 in early trading.
Foreign institutional investors offloaded equities worth Rs 7,536.36 crore on Friday, according to exchange data.
According to government data released on Friday following a revamp of the GDP calculation framework, the country's economic growth is projected at 7.6 per cent in the current fiscal year.
The latest RBI data released on Friday showed India's forex reserves dropped by USD 2.119 billion to USD 723.608 billion during the week ended February 20. The overall reserves had jumped by USD 8.663 billion to a record high of USD 725.727 billion in the previous reporting week.
