The Indian rupee depreciated by 16 paise to 74.55 against the US dollar in opening trade on Tuesday, as a muted trend in the domestic equity market and firm American dollar weighed on investor sentiment. At the interbank foreign exchange, the rupee opened on a weak note at 74.48, then lost further ground and touched 74.55 against the American dollar, registering a decline of 16 paise from the last close.

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On Monday, the rupee had closed at 74.39 against the US dollar. The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.01 per cent to 96.55.

According to Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, USD-INR has not been able to cross 74.55. But "the way the dollar index has risen, we should see it rising towards 75 levels with month-end approaching," he said. Bhansali further noted that "the stock markets are in falling mode and the Nifty is expected to go up to 16,000 before we start the next bull run." Exporters may sell for cash and very far term so that they do not lose out on premiums. But may wait for short and medium term for 75.00 levels, Bhansali said, adding that importers are likely to keep hedging every dip near 74.20 and 74.30.

Meanwhile, global oil benchmark Brent crude futures declined 0.45 per cent to USD 79.34 per barrel. Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 3,438.76 crore, as per exchange data.

On the domestic equity market front, the 30-share Sensex was trading 245.72 points or 0.42 per cent lower at 58,220.17, while the broader NSE Nifty declined 50.30 points or 0.29 per cent to 17,366.25.