Rupee Opens Weaker Against US Dollar

The rupee opened weaker against the greenback as the dollar index recovered losses from Monday. The Indian unit opened 14 paise lower at 86.85 against the US Dollar.

The rupee settled at 86.71 a dollar on Monday.

The dollar index, which measures the strength of the greenback against six major currencies, rose as euro and pound sterling pared gains. The European currencies gave up most gains as market participants weighed difficulties Christian Democratic Union's Friedrich Merz will face in forming the coalition government.

"Market participants worry that potential German coalition government formation will unlikely uplift the economy, putting some pressure on Euro. dollar index seen bouncing back from 106.20 levels. USDINR pair now finding base around 86.55 levels, while open to test 86.95 levels again," said Kunal Sodhani, vice president, global trading centre, Shinhan Bank.

The dollar index was 0.05% higher at 106.65 as of 8:53 a.m., according to data on Bloomberg terminal. The index declined Monday on worries over health of US economy.

To add to rupee's woes, crude oil prices rose after the US President Donald Trump imposed fresh sanction on Iranian oil shipments. April future contract of brent crude on Intercontinental Exchange was trading 0.51% higher at $75.16 a barrel as of 8:54 a.m.

Due to risk off sentiments, market is expected to buy dollars to take it higher against the rupee. The Reserve Bank of India may be present at higher levels to protect it beyond 86.90 for the present, said Anil Kumar Bhansali, head, treasury and executive director, Finrex Treasury Advisors LLP.