Mumbai, Jul 29 (PTI) The rupee depreciated 12 paise to close at 86.82 (provisional) against the US dollar on Tuesday, weighed down by a jump in the US dollar index and a surge in crude oil prices.

Forex traders said month-end dollar demand from Oil Marketing Companies (OMCs) and importers further pressurised the rupee.

Moreover, investors remained on the sidelines ahead of the US Federal Reserve and Bank of Japan's monetary policy decision this week.

At the interbank foreign exchange, the domestic unit opened at 86.76 against the greenback and touched an intra-day low of 86.92 against the greenback.

At the end of Tuesday's trading session, the local unit settled at 86.82 (provisional), down 12 paise over its previous closing price.

On Monday, the rupee had settled at 86.70 against the dollar.

"The Indian rupee fell by nearly 20 paise on a jump in the US dollar index and a surge in crude oil prices. The US dollar rallied on optimism over the US-EU trade deal. However, a bounce back in the domestic equities after falling sharply over the past three sessions cushioned the downside," said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.

Forex traders said investors traded cautiously awaiting the outcome of India-US trade talks ahead of the August 1 deadline.

"The lingering trade deal between India and the US may continue to weigh on the rupee. Rising crude oil prices and foreign outflows may also pressurise the rupee. FIIs have offloaded stocks worth nearly Rs 37,000 crore till date, the biggest selling since February 2025," Choudhary added.

If the discussions fail or get delayed, Indian exporters could face fresh pressure -- adding to the rupee's challenges.

However, if a deal is reached, it could offer a much-needed breather. Until then, the uncertainty is likely to keep market participants cautious.

"Month-end dollar demand from OMCs and importers may further pressurise the rupee," Choudhary said, adding, "investors may remain cautious ahead of the US Federal Reserve and Bank of Japan’s monetary policy decision this week." Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose marginally by 0.13 per cent to 98.75.

Brent crude, the global oil benchmark, went up by 0.46 per cent to USD 70.36 per barrel in futures trade, as developing trade agreements eased tariff concerns and boosted future energy demands.

In the domestic equity market, the 30-share BSE Sensex advanced 446.93 points, or 0.55 per cent, to close at 81,337.95, while the Nifty rose 140.20 points, or 0.57 per cent, to settle at 24,821.10.

Foreign institutional investors (FIIs) offloaded equities worth Rs 6,082.47 crore on a net basis on Monday, according to exchange data. PTI DRR HVA

Rupee depreciation driven by dollar strength, higher oil prices and month end importer demand heightens forex pressure ahead of policy decisions. Rupee depreciation was driven by a stronger dollar index and rising crude prices, compounded by month end dollar demand from Oil Marketing Companies and importers, foreign institutional investor outflows, and market caution ahead of US and Bank of Japan monetary policy decisions; India US trade talks were flagged as a key near term risk that could either exacerbate or alleviate pressure on the currency.