The Indian rupee depreciated 5 paise to 74.37 against the US dollar in opening trade on Thursday tracking the strength of the greenback and strong crude oil prices.
At the interbank foreign exchange, the rupee opened at 74.37 against the dollar, registering a fall of 5 paise over its previous close.
On Wednesday, the rupee had settled at 74.32 against the US dollar.
"Risk appetite remained weak amid worries about the rise in COVID-19 cases," Reliance Securities said in a research note.
Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities, said the rupee is trading with a downward bias against the US Dollar, on the back of stronger US Dollar Index and higher oil prices. "The US Dollar Index is trading at the highest level since early April and Asian currencies are under pressure. After a stronger-than-expected US ADP jobs report and robust housing sector data, hopes are high that on Friday, the US report will have stellar set of employment numbers (NFP). I expect dollar-rupee to trade within a range of 74.10 and 74.80 over the near-term,” he said.
Asian currencies weak
Asian currencies have started weaker against the greenback this morning and could also weigh on the local unit, the note added.
Global oil benchmark Brent crude futures rose 0.49 percent to $75.13 per barrel.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.03 percent at 92.40.
On the domestic equity market front, BSE Sensex was trading 40.01 points or 0.08 per cent lower at 52,442.70, while the broader NSE Nifty declined 6 points or 0.04 per cent to 15,715.50.
Foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 1,646.66 crore, as per exchange data.
(With PTI inputs)