The rupee opened two paise lower on July 6, tracking weakness in its Asian peers, as traders stayed on the sidelines awaiting fresh cues while importers used the current levels to hedge their positions.
The local currency was trading at Rs 95.23 against the US dollar, compared with Rs 95.21 in the previous session. Despite the marginal move, the rupee ended last week with a decline of nearly 1%, marking its first weekly close beyond the Rs 95-per-dollar level in three weeks.
The US dollar index eased to around 100.90 after softer-than-expected US employment data strengthened expectations of a less aggressive monetary policy stance from the Federal Reserve. However, the rupee has yet to see a meaningful recovery.
"When the rupee cannot rally on good news like falling oil and a softer dollar, it tells you the underlying mood is fragile. Any fresh negative trigger could push USD/INR towards the Rs 95.80 to Rs 96.00 zone," said Amit Pabari, Managing Director, CR Forex Advisors.
Lower crude oil prices have also been supportive for the rupee. Brent crude was trading near $71 a barrel, its lowest level since late February, as oil flows through the Strait of Hormuz continued to recover.
Market participants will now watch the minutes of the US Federal Reserve's latest policy meeting, due later this week, for further clues on the central bank's interest rate outlook and the direction of global currencies.