Mumbai, Sep 2 (PTI) The rupee declined 5 paise to close at an all-time low of 88.15 against the US dollar on Tuesday, as Indo-US trade deal uncertainty and weak domestic equity markets pressured the local unit.

Forex traders said the rupee is trading near all-time low levels as risks remained skewed to the downside amid uncertainty over US trade tariffs.

Moreover, persistent foreign fund outflows or dollar strength could drive further weakness, they added.

On Monday, the rupee revisited its all-time intra-day low of 88.33 against the American currency.

At the interbank foreign exchange market, the rupee opened weak at 88.14 against the US dollar, then lost further ground to an intraday low of 88.20.

The rupee finally settled for the day at 88.15 against the US dollar, down 5 paise from its previous close.

On Monday, the rupee closed at a record low of 88.10 against the US dollar.

"The rupee erased most of its intraday gains. This was driven by a risk-averse sentiment and an increase in imported commodity prices. The market saw high demand for dollars from importers, while the supply of the currency was limited amid foreign fund outflows," Dilip Parmar - Senior Research Analyst, HDFC Securities, said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.63 per cent to 98.38.

Brent crude, the global oil benchmark, was trading 1.80 per cent higher to USD 69.38 per barrel in futures trade.

"We expect the rupee to trade with a slight negative bias as uncertainty over trade tariffs and weak domestic markets may pressurise the local unit. FII outflows and a positive tone in crude oil prices may further weigh on the domestic currency," said Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset ShareKhan.

Traders may take cues from ISM manufacturing PMI data from the US. Investors may remain cautious ahead of the non-farm payrolls report from the US this week, Choudhary said.

"Markets may also remain volatile ahead of US President Donald Trump’s speech tonight. USD/INR spot price is expected to trade in a range of 87.80 to 88.50," he added.

On the domestic equity market front, Sensex dropped 206.61 points to settle at 80,157.88, while Nifty declined 45.45 points to 24,579.60.

Foreign Institutional Investors offloaded equities worth Rs 1,159.48 crore on Tuesday, according to exchange data.

Meanwhile, Commerce and Industry Minister Piyush Goyal on Tuesday said India is negotiating a bilateral trade agreement (BTA) with the United States.

India has already inked free trade agreements with Australia, the UAE, Mauritius, the UK and the four-European nation bloc EFTA, he added.

India and the US have been negotiating the pact since March. So far, five rounds of talks have been completed.

After a 50 per cent duty was imposed from August 27, the US team has deferred its visit to India for the next round of talks, which was scheduled from August 25.

So far, no new dates have been finalised for the sixth round of negotiations.

Amid tensions between India and the US, Treasury Secretary Scott Bessent said that at the end of the day, the two great countries will get this solved. PTI DRR DRR BAL BAL BAL

Trade tariff uncertainty destabilizes currency as stalled bilateral talks and import dollar demand pressure the local unit. Rupee weakness is driven by uncertainty over US trade tariffs, elevated imported commodity prices, limited dollar supply amid foreign portfolio outflows, and stronger oil prices; stalled negotiations on a Bilateral Trade Agreement following a US duty imposition have deferred further rounds and represent a material policy risk to the currency.