(PTI) The rupee depreciated 4 paise to 79.88 against the US dollar in opening trade on Tuesday tracking a strong American currency and risk aversion in domestic markets.
At the interbank foreign exchange, the rupee opened at 79.85 against the dollar, then fell to 79.88, registering a decline of 4 paise over the last close.
On Monday, the rupee closed at 79.84 against the dollar.
"The rupee could continue to extend losses in the week and possibly test new lows on prospects that the US Federal Reserve will continue to deliver large rate hikes," said Sriram Iyer, Senior Research Analyst at Reliance Securities.
Moreover, worries about inflation could also keep the local unit under pressure. However, the presence of the Reserve Bank of India (RBI) could cap losses in the domestic unit.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.18 per cent to 108.89.
"The dollar index started marginally weaker this Tuesday morning in Asian trade but downside remained capped on safe haven flows," Iyer said.
Meanwhile, global oil benchmark Brent crude futures rose 0.75 per cent to USD 97.20 per barrel.
On the domestic equity market front, the 30-share Sensex was trading 60.86 points or 0.10 per cent higher at 58,834.73, while the broader NSE Nifty was up 33.50 points or 0.19 per cent to 17,524.20.
Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth ₹453.77 crore, as per exchange data.