The rupee weakened by 47 paise to settle at 95.73 (provisional) against the US dollar on Tuesday amid renewed geopolitical tensions in West Asia and a sharp rise in crude oil prices. Forex market participants said the strengthening of the US dollar overseas along with weakness in domestic equity markets also weighed on the Indian currency.
At the interbank foreign exchange market, the rupee opened at 95.43 against the greenback. During the day, it touched a high of 95.33 and slipped to an intra-day low of 95.76. By the close of trading, the domestic currency ended at 95.73 (provisional), registering a decline of 47 paise from Monday’s closing level.
In the previous session, the rupee had appreciated by 34 paise to close at 95.26 against the US dollar, supported by RBI intervention through dollar sales that kept the local currency well supported at higher levels. “We expect the rupee to trade with a negative bias amid uncertainty surrounding the US-Iran situation and concerns over possible military escalation in the Middle East.
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“However, easing crude oil prices from elevated levels may offer some support to the rupee on dips. The USDINR spot rate is expected to move within a range of 95.20 to 95.85,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan. Forex dealers noted that the rupee continues to remain vulnerable to rising global crude oil prices and the strength of the American currency in overseas markets. The dollar index, which measures the greenback against a basket of six major currencies, was trading lower by 0.19 per cent at 99.05.
Meanwhile, Brent crude, the global oil benchmark, surged 3.43 per cent to USD 99.94 per barrel in futures trade following reports of fresh US attacks on Iran, which offset optimism surrounding a possible agreement to reopen the Strait of Hormuz.
US President Donald Trump on Monday said that negotiations with Iran aimed at ending the conflict were progressing “nicely”. However, officials indicated that reaching a final agreement could take time due to Tehran’s complex communication channels with its supreme leader.
On the domestic equity front, the Sensex declined 479.26 points to close at 76,009.70, while the Nifty dropped 118 points to settle at 23,913.70.
According to exchange data, foreign institutional investors (FIIs) turned net buyers on Monday, purchasing equities worth Rs 821.75 crore.
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