Rupee weakens 16 paise to 93.32 vs dollar in early trade

MUMBAI: The rupee declined 16 paise to 93.32 against the US dollar in early trade on Tuesday, as the American currency stayed firm and the Reserve Bank eased restrictions on speculative bets on the Indian currency.

Positive domestic equity markets and inflows of foreign funds supported the local currency even as uncertainties surrounding the West Asia peace agreement kept investors worried, forex traders said.

The Reserve Bank on Monday partially withdrew directives taken on April 1 to curb excessive speculation in the rupee.

The banking regulator had capped the net open positions in non-deliverable forward markets at USD 100 million, mandating banks to comply by April 10.

Under revised directives, authorised dealers or banks can resume offering non-deliverable derivative contracts involving INR to resident or non-resident users, but must comply with certain restrictions on related-party transactions.

At the interbank foreign exchange market, the rupee opened at 93.25 and fell to the 93.37 level before trading at 93.32 against the greenback in early deals, registering a loss of 16 paise from the previous closing level.

On Monday, the rupee settled with a loss of 25 paise at 93.16 against the US dollar.

The currency had gained 47 paise in the preceding two sessions.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.04 per cent to 97.94.

Brent crude, the global oil benchmark, was trading 0.51 per cent down at USD 94.99 per barrel in futures trade.

Analysts said crude prices remained volatile due to persistent worries over disruptions of supplies of oil from the Persian Gulf if Iran continues to block tankers from exiting the Strait of Hormuz.

Also, the ceasefire agreement between the United States and Iran is scheduled to expire on Wednesday.

In the domestic equity markets the 30-share Sensex was trading 379.33 points or 0.48 per cent up at 78,899.63 in early trade, while the Nifty rose 103.70 points or 0.43 per cent to 24,468.55.

Foreign Institutional Investors bought equities worth about Rs 2,066 crore on Monday, according to NSDL data.