Mumbai, March 12 The rupee depreciated by 31 paise to 92.32 against the US dollar in the early trade on Thursday, due to outflows by foreign investors, rising global crude oil prices, and a stronger US dollar, amid the ongoing conflict in the Middle East.
The weak start to the trading session in the domestic equity markets further weighed on the local currency, according to traders.
At the interbank foreign exchange market, the rupee opened at 92.25 against the US dollar and further declined to 92.32, down 31 paise from its previous close.
The local currency declined by 16 paise to settle at 92.01 against the US dollar on Wednesday.
"Escalations of attacks around the Strait of Hormuz and attacks on neighboring countries pushed oil prices higher, and the risk-off sentiment was supporting the dollar as a safe haven asset, with the prices of gold, along with silver, also falling," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
"The Reserve Bank was protecting the 92.00 level yesterday (Wednesday) and may continue to do so today, but the trend of the rupee still seems weak," he added.
The dollar index, which gauges the strength of the US dollar against a basket of six currencies, was trading at 99.47, up 0.24 per cent.
Brent crude, the global oil benchmark, was trading at USD 101.12 per barrel in futures trade, up by 9.94 per cent.
On the domestic equity market front, the Sensex plunged by 827.58 points, or 1.08 per cent, to settle at 76,036.13, while the Nifty plummeted by 310.55 points, or 1.13 per cent, to 23,556.30.
Foreign institutional investors sold equities worth Rs 6,267.31 crore on a net basis on Wednesday, according to exchange data.
