The rupee depreciated by 24 paise to 69.46 against the US dollar in early trade Monday on increased demand for the US currency from importers and weak opening in domestic equities.
Domestic bourses opened on a negative note Monday with benchmark indices Sensex trading 362.11 points down at 38,601.15 and Nifty down 112.75 points at 11,599.50.
Reacting to a tweet by US President Donald Trump, Chinese bourses sank led by Shanghai Composite Index that plunged over 5 per cent. Other indices in Tokyo and Seoul were also trading in the red.
Trump, in his Sunday tweet, turned up the heat by saying he would raise import taxes on $200 billion in Chinese products to 25 per cent from 10 per cent on Friday
The 30-share Sensex too plummeted 453 points in early session. It, however, recovered some lost ground and was trading 321.03 points, or 0.82 per cent, lower at 38,642.23. The NSE Nifty was trading 93.95 points, or 0.80 per cent, down at 11,618.30.
Top losers in early session were Tata Motors, Tata Steel, Yes Bank, Vedanta, HDFC twins, IndusInd Bank, HUL, Axis Bank, Bharti Airtel, NTPC, ICICI Bank, ONGC, Bajaj Finance, Infosys and RIL, dropping up to 4.65 per cent.
Bucking negative market trend were PowerGrid, TCS, Asian Paints and Maruti, rising up to 0.42 per cent.
According to traders, domestic investors turned jittery amid bloodbath in Chinese equities.
However, easing crude prices helped in restricting the slide in the Indian unit to some extent, they added.
Brent crude futures, the global oil benchmark, fell 2.22 per cent to $69.28 per barrel.
Forex traders said, the US President Donald Trump on Sunday threatened to raise tariffs on $200 billion worth of Chinese goods and this in turn impacted investor sentiment in the currency market.
The rupee opened weak at 69.38 at the interbank forex market and then fell further to 69.46, down 24 paise over its last close. The local currency however pared the initial loss and was trading at 69.41 at 0926 hrs.
The rupee had strengthened by 15 paise to close at 69.22 against the US dollar Friday.
Besides, strength in dollar against major rival currencies, foreign fund outflows and heavy selling in domestic equities also kept pressure on the Indian rupee, dealers said.
Meanwhile, foreign institutional investors (FIIs) pulled out Rs 400.68 crore on a net basis Friday, provisional data showed.