Mumbai, Jun 29 (PTI) The rupee pared initial gains and settled lower by 6 paise at 94.51 against the US dollar on Monday, as renewed geopolitical tensions hit investors' risk appetite.

Forex traders said the rupee opened on a positive note with crude oil prices remaining supportive and foreign inflows improving, but a renewed flare-up in geopolitical tensions after fresh military exchanges between the US and Iran dented investor sentiment.

At the interbank foreign exchange market, the rupee opened at 94.36, then gained momentum and touched an intraday high of 94.25 and a low of 94.56 against the American currency.

At the end of Monday's trade, the rupee was quoted at 94.51, down by 6 paise over its previous close.

On Thursday, the rupee settled at 94.45 against the US dollar.

Indian stock, currency and commodities markets were shut on Friday on account of Muharram.

"We expect the rupee to trade with a negative bias on renewed geopolitical tensions between the US and Iran. Overall strength in the US dollar on a hawkish Fed may also pressurise the rupee.

"However, a decline in crude oil prices and easing concerns over inflation may support the rupee at lower levels. USDINR spot price is expected to trade in a range of 94.20 to 94.80," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 101.14, down 0.21 per cent.

Brent crude, the global oil benchmark, was trading higher by 1.4 per cent at USD 73.62 per barrel in futures trade. ​ Iran again launched drone and missile attacks targeting Bahrain and Kuwait on Sunday following new US airstrikes against the Islamic Republic. Iran has threatened a "complete halt" in negotiations to end the war if Washington continues its attacks.

On the domestic equity market front, the Sensex dropped 372.10 points to settle at 76,728.37, while the Nifty declined 109.75 points to 23,946.25.

Foreign institutional investors sold equities worth Rs 1,350.1 crore on a net basis on Monday, according to exchange data.

Meanwhile, India's forex reserves increased by USD 963 million to USD 672.587 billion during the week ended June 19, the RBI said on Friday. In the previous reporting week, the overall reserves had dropped by USD 9.985 billion to USD 671.625 billion. PTI DRR VHI SHM