Mumbai, May 11 (PTI) The rupee crashed 139 paise to 94.90 against the greenback in early trade on Monday after President Donald Trump rejected Iran's response to the US's peace proposal, following which crude oil prices surged rapidly.

A strengthening US dollar and steep FPI outflows further pressured the local unit, according to forex traders.

At the interbank foreign exchange, the rupee opened at 94.97 against the US dollar before inching up to 94.90, down a staggering 139 paise from its previous close.

On Friday, the rupee pared its losses and ended with a sharp gain of 71 paise at 93.51 against the greenback.

Iran has sent its response to the latest US ceasefire proposal via Pakistani mediators and wants negotiations to focus on permanently ending the war, Iran's state-run media said on Sunday.

Trump rejected Iran's proposal to end the months-long war as "totally unacceptable" without sharing details even as a key Republican leader urged him to consider the "military option".

"After US President Donald Trump rejected Iran's response to the US Peace proposal, Brent oil rose higher, dollar index also higher and risky assets lower. Israeli attacks on Lebanon continued while Hezbollah said it struck Israeli army camps with drones while the UAE also intercepted drones from Iran," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

"Thus the war continues keeping oil prices higher and accordingly rupee opened lower than Friday's close. On Friday, the Reserve Bank of India (RBI) was present near to 94.70 levels taking the closing of rupee higher to 94.48," he said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 98.20, up 0.20 per cent.

Brent crude, the global oil benchmark, rose sharply by 4.17 per cent to USD 105.5 per barrel in futures trade.

On the domestic equity market front, Sensex plummeted 810.35 points, or 1.05 per cent, to 76,517.84, while the Nifty tanked 225.40 points, or 0.93 per cent, to 23,950.75.

Foreign Institutional Investors offloaded equities worth Rs 4,110.60 crore on Friday, according to exchange data.

India's forex reserves dropped by USD 7.794 billion to USD 690.693 billion during the week ended May 1, the RBI said on Friday. In the previous reporting week ended April 24, the overall reserves declined by USD 4.82 billion to USD 698.487 billion. PTI TRB TRB DR DR

Rupee weakness deepens as higher crude prices, stronger dollar and foreign outflows pressure early trade. The rupee weakened sharply in early trade after higher crude oil prices, a stronger US dollar, and foreign portfolio investor outflows added pressure. It opened lower against the US dollar and traded near 94.90 after a steep fall from the previous close, while domestic equities declined and forex reserves were reported lower in the latest weekly update.