Mumbai, Jun 1 (PTI) The rupee depreciated 9 paise to 94.94 against the US dollar in early trade on Monday weighed down by elevated crude oil prices as the Israel-Lebanon conflict escalated.

Forex traders said Dollar Index was nearer to 99 levels while oil prices rose to USD 93 per barrel after Israel-Lebanon conflict escalated following sharp weekly drops as Washington and Tehran discussed potential ceasefire that could eventually ease out the disruptions around Strait of Hormuz.

At the interbank foreign exchange market the rupee opened at 94.93 then lost some ground and touched an early low of 94.94, registering a fall of 9 paise from its previous close.

In initial trade, the rupee also touched 94.75 against the American currency.

On Friday, the rupee appreciated 73 paise to close at 94.85 against the US dollar on suspected interventions by the RBI.

"The rupee closed at a high as RBI was present in the market selling dollars ensuring that it did not cross 96.00 levels again. Though there were outflows related to MSCI the rupee was able to maintain its Mojo solely due to the presence of RBI in the markets," said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

According to RBI's latest data released on Friday, India's forex reserves dropped by USD 7.511 billion to USD 681.384 billion during the week ended May 22, the RBI said on Friday.

In the previous reporting week, the kitty had dropped USD 8.094 billion to USD 688.894 billion.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.04 up 0.11 per cent.

"The dollar index has been well bid at all lower levels due to safe haven demand with conflict continuing in the Middle East," Bhansali said.

Brent crude, the global oil benchmark, was trading higher by 1.98 per cent at USD 92.92 per barrel in futures trade.

On the domestic equity market front, Sensex climbed 206.16 points to 74,981.90 in early trade, while the Nifty was up 42.65 points to 23,604.80.

Foreign institutional investors offloaded equities worth Rs 21,105.86 crore on a net basis on Friday, according to exchange data.

Meanwhile, US President Donald Trump has said the US and Iran are close to a "very good deal," but if Washington does not get what it wants, then it will “end it in a different way." Trump said the Iranians are "good negotiators," but argued that the United States now holds "all the cards" because Iran has been "militarily defeated." PTI DRR DRR DR

Rupee weakness reflects crude oil pressure, safe-haven dollar demand and suspected central bank support in the forex market. The rupee weakened in early trade against the US dollar amid higher crude oil prices, a firmer dollar index and heightened geopolitical tensions linked to the Israel-Lebanon conflict. Market participants also referred to suspected RBI intervention in the currency market, a decline in India's forex reserves and net foreign institutional investor selling in equities.