Mumbai, Jul 6 (PTI) The rupee fell 10 paise to 95.28 against the American currency in early trade on Monday, weighed down by the broad strength of the American currency in the overseas market.

Forex traders said whenever fresh foreign inflows enter the country, the central bank is likely to use the opportunity to rebuild its reserve position rather than allowing the rupee to strengthen too much.

Moreover, uncertainty prevailed over the progress of US-Iran peace talks keeping a geopolitical risk premium in the market.

At the interbank foreign exchange market, the rupee opened at 95.25, then touched 95.28 against the US dollar, registering a loss of 10 paise from its previous close.

On Friday, the rupee appreciated 17 paise to close at 95.18 against the US dollar.

"The message from last week is simple. When the rupee cannot rally on good news like falling oil and a softer dollar, it tells you the underlying mood is fragile. Any fresh negative trigger could push USDINR towards the 95.80 to 96.00 zone, while support holds near 94.80 to 95.00," CR Forex Advisors MD Amit Pabari said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 100.95, up 0.10 per cent.

"The dollar index eased to around 100.90 as weak US jobs data continued to weigh on it. Normally, a softer dollar is exactly what the rupee needs to catch a breath. This time, it simply did not happen, and that is the part worth watching closely this week," Pabari added.

Brent crude, the global oil benchmark, was trading lower by 0.58 per cent at USD 71.70 per barrel in futures trade.

On the domestic equity market front, Sensex climbed 281.40 points to 78,051.03 in early trade, while the Nifty rallied 74.60 points to 24,347.05.

Foreign institutional investors turned net buyers, purchasing equities worth Rs 1,355.33 crore on a net basis on Friday, according to exchange data.

India's forex reserves dropped USD 5.654 billion to USD 666.933 billion during the week ended June 26, the RBI said on Friday.

In the previous reporting week, the kitty jumped USD 963 million to USD 672.587 billion.

The kitty had expanded to an all-time high of USD 728.494 billion during the week ended February 27 this year before the onset of the West Asia conflict, which led to several weeks of a drop as the rupee came under pressure and the RBI had to intervene in the forex market through dollar sales. PTI DRR DR DR

Rupee weakness against the US dollar reflects dollar strength, reserve rebuilding by the central bank, and persistent market caution. The rupee weakened in early trade against the US dollar, opening lower and trading at 95.28 after a decline of 10 paise, as broad dollar strength in overseas markets weighed on the currency. Market participants said the central bank is likely to use fresh foreign inflows to rebuild reserves rather than allow excessive appreciation. India's foreign exchange reserves also declined in the latest weekly reporting period after earlier pressure on the rupee had led to intervention through dollar sales.