Mumbai, Oct 27 (PTI) The rupee depreciated 12 paise to 87.95 against the US dollar in early trade on Monday, weighed down by rising crude oil prices supported by optimism over a potential US-China deal.

Forex traders said the rally in crude oil prices was driven by the potential US-China trade deal, which supports expectation for a stronger global oil demand.

At the interbank foreign exchange market, the rupee opened at 87.87, and slipped to 87.95 against the greenback, registering a fall of 12 paise from its previous close.

On Friday, the rupee appreciated 5 paise to close at 87.83 against the US dollar.

"For now, the rupee seems to be walking a tightrope between caution and hope. If it manages to break below 87.50, it could find room to appreciate toward 86.80–87 in the near term. On the other hand, resistance stands around 88.30–88.40," CR Forex Advisors MD – Amit Pabari said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.04 per cent to 98.91.

Brent crude, the global oil benchmark, rose 0.02 per cent to USD 65.95 per barrel in futures trading.

The US sanctions against Russia continue with traders continuing to watch developments around trade negotiations and geopolitical events as these remain key for energy market sentiment and ongoing price trajectory, said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

On the domestic equity markets front, Sensex climbed 272.7 points to 84,484.58 in early trade, while the Nifty was up 88.55 points to 25,883.70.

Foreign Institutional Investors purchased equities worth Rs 621.51 crore on Friday, according to exchange data.

Meanwhile, India's forex reserves increased by USD 4.496 billion to USD 702.28 billion during the week ended October 17, as the value of gold reserves rose further, the RBI said on Friday.

In the previous week, the overall reserves had jumped by USD 2.176 billion to USD 697.784 billion. PTI DRR DRR ANU ANU

Rupee weakens on rising crude prices and trade optimism; reserves up and equities see foreign buying. The rupee slipped to 87.95 per US dollar as rising crude prices, supported by optimism over a potential US-China trade deal, pressured the currency; commentary noted technical support below 87.50 and resistance near 88.30-88.40. Concurrently, the dollar index eased, foreign institutional investors continued net equity purchases, and India's forex reserves rose by about USD 4.496 billion to USD 702.28 billion, with traders flagging US sanctions on Russia and geopolitical developments as ongoing influences on energy-market sentiment and exchange-rate movements.