Mumbai, Mar 16 (PTI) The rupee strengthened by 2 paise to settle at 92.28 against the US dollar on Monday, supported by a firm trend in domestic equity markets and a weak greenback against major currencies overseas.

However, surging crude oil prices and foreign funds outflows triggered by geopolitical uncertainties restricted the rupee's gain.

At the interbank foreign exchange, the local unit opened at 92.44 and touched its lowest-ever intra-day level of 92.47 against the greenback during the session.

The local unit ended the session at 92.28 against the dollar, registering a gain of 2 paise from its previous close.

In the preceding session, the rupee hit its lowest intra-day level of 92.47 before ending at 92.30 against the dollar, its lowest-ever closing level until Friday.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said that some softness in the US dollar index and hopes of the reopening of the Strait of Hormuz supported the domestic currency.

According to Jigar Trivedi, Senior Research Analyst at Indusind Securities, the rupee hovered near record lows, pressured by elevated crude prices and sustained foreign equity outflows.

"Persistently high oil prices are forcing importers to purchase more dollars, widening India's trade deficit and creating a material terms-of-trade shock," he said, adding, "the Reserve Bank of India has intervened in FX markets to stabilise the currency and prevent excessive volatility".

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.13 per cent lower at 99.97.

Brent crude, the global oil benchmark, was trading higher by 1.46 per cent at USD 104.69 per barrel in futures trade.

On the domestic equity market front, the Sensex surged 938.93 points, or 1.26 per cent, to settle at 75,502.85, while the Nifty climbed 257.70 points, or 1.11 per cent, to 23,408.80.

The latest government data released on Monday showed the country's trade deficit narrowed to USD 27.1 billion in February compared to January.

Merchandise exports dropped marginally by 0.81 per cent to USD 36.61 billion, while imports increased by 24.11 per cent to USD 63.71 billion in February this year from USD 51.33 billion recorded a year ago.

Foreign institutional investors sold equities worth Rs 9,365.52 crore on a net basis on Monday, according to exchange data.

"Traders may take cues from the Empire State manufacturing index and industrial production data from the US. Investors will also watch out for the FOMC, ECB, Bank of Japan and Bank of England's monetary policy this week," Choudhary of Mirae Asset Sharekhan said, and projected the USD-INR spot price to trade in a range of Rs 92.10 to Rs 92.75.

"Market participants are also cautious ahead of the US Federal Reserve's interest rate decision this week, which could influence global dollar flows and emerging market currencies," Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said.

"If geopolitical tensions persist and energy prices remain elevated, the rupee may continue to face downside pressure. In the near term, the weak trading range for the rupee is expected between 91.95 and 92.65 against the US dollar." PTI HVA BAL BAL