The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.47, down 0.06%.

The rupee traded in a narrow range against the US dollar in early trade on Thursday as rising equity outflows and dimming prospects of US-Iran truce renewed pressure on the domestic unit.

Forex traders said prolonged West Asia crisis poses a major risk for India, which relies heavily on energy imports.

At the interbank foreign exchange market, the rupee opened at 95.70, then touched 95.69 in initial trade, registering a rise of 7 paise from its previous close.

On Wednesday, the rupee depreciated 40 paise to close at 95.76 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.47, down 0.06 per cent.

Brent crude, the global oil benchmark, was trading lower by 0.93 per cent at $96.90 per barrel in futures trade.

"For India, every rise in crude oil carries an additional burden. Like an unexpected increase in household expenses, higher oil prices mean more dollars are required to meet import needs, often putting pressure on the rupee," CR Forex Advisors MD Amit Pabari said.

Another factor weighing on sentiment has been persistent foreign fund outflows, traders said.

Foreign investors have withdrawn approximately $26.4 billion from Indian markets this year, already surpassing last year's record outflows. At the same time, overseas direct investments by Indian companies rose to $48.39 billion during FY 2025-26, while resident remittances abroad touched $28.9 billion, Pabari said.

Every dollar leaving the country increases demand for foreign currency and adds pressure on the rupee's valuation, he added.

The spotlight now shifts to the RBI Monetary Policy Committee decision on June 5.

"Ordinarily, markets would be debating growth and inflation. This time, however, policymakers also have to consider a rapidly weakening rupee, elevated oil prices, and shifting global interest-rate expectations," Pabari said.

On the domestic equity market front, Sensex declined 229.69 points to 74,139.32 in early trade, while the Nifty dropped 66.30 points to 23,339.

Foreign institutional investors offloaded equities worth Rs 5,616.56 crore on a net basis on Wednesday, according to exchange data.

Published on June 4, 2026