Mumbai

The rupee weakened sharply by 41 paise to close at 94.56 (provisional) against the US dollar on Tuesday, pressured by rising crude oil prices, continued foreign fund outflows and growing geopolitical uncertainty.

At the interbank foreign exchange market, the domestic currency opened at 94.35 per dollar and slipped further during the session to touch an intraday low of 94.58 before ending at 94.56. On Monday, the rupee had settled marginally stronger at 94.15.

Forex market participants said the currency has already seen notable weakness as investors factor in the possibility of a wider current account deficit and unstable capital flows. Persistent foreign investor selling has also weighed on sentiment, with foreign institutional investors reportedly pulling out more than USD 19 billion from Indian equities so far this year.

Analysts said subdued foreign direct investment inflows and reduced portfolio investments amid global uncertainty, high market valuations and limited new investment themes have contributed to the pressure on the rupee.

The dollar index, which measures the greenback against six major currencies, was up 0.24 per cent at 98.73. Meanwhile, Brent crude rose 2.62 per cent to USD 111.07 per barrel in futures trade, adding to concerns for India, a major oil importer.

Experts noted that even if tensions in West Asia ease, crude prices may remain elevated in FY27, which could keep the rupee in the 92–93 range on average. They also cautioned that any escalation in the conflict and further rise in oil prices could trigger additional weakness in the domestic currency.

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In the equity market, the Sensex declined 416.72 points to close at 76,886.91, while the Nifty fell 97 points to end at 23,995.70. Foreign institutional investors were net sellers of equities worth Rs 1,151.48 crore on Monday, according to exchange data.