The Indian rupee declined by 4 paise to 95.52 against the US dollar in early trade on Thursday, dragged down by rising crude oil prices following heightened tensions in West Asia, which unsettled global markets and sparked concerns over trade uncertainties.
Analysts noted that oil prices reached their highest levels in weeks after US President Donald Trump announced the termination of the ceasefire with Iran, in response to Iranian attacks on commercial vessels in the Strait of Hormuz and US military assets in Gulf nations.
Positive sentiment in domestic equity markets, however, provided some support to the rupee, they said.
At the interbank foreign exchange market, the rupee opened at 95.52 and remained weaker against the US dollar, slipping 4 paise from its previous closing level.
On Wednesday, the rupee had plummeted 52 paise to settle at 95.48 against the dollar.
The dollar index, which measures the greenback’s strength against a basket of six currencies, was trading at 100.98, down 0.09 per cent.
In commodities markets, Brent crude, the global oil benchmark, rose 1 per cent to USD 78.80 per barrel in futures trading.
Analysts linked the sharp increase in crude prices to the escalated tensions in West Asia, which are expected to disrupt the Strait of Hormuz and impede the movement of oil tankers.
The domestic equity market experienced a rebound, with the Sensex gaining 454.78 points, or 0.59 per cent, to 76,958.38, and the Nifty climbing 151.10 points, or 0.63 per cent, to 24,033.15. Both benchmarks had dropped more than 2 per cent in the previous session.
Foreign institutional investors purchased equities worth Rs 1,962.80 crore on a net basis on Wednesday, according to exchange data.
