Rupee falls 28 paise to 96.03 against US dollar amid risk-off sentiment

The rupee fell 28 paise to close at 96.03 against the US dollar on Monday as risk-off sentiment, rising crude oil prices and US-Iran tensions weighed on the currency. Forex traders said continued geopolitical uncertainty could keep pressure on the rupee

Mumbai: The rupee depreciated 28 paise to close at 96.03 (provisional) against the US dollar on Monday amid risk-off sentiment in global markets after the US rejected a deal proposal by Iran, diminishing hopes of the reopening of the Strait of Hormuz.

Forex traders said global risk sentiment deteriorated as the stalemate between the US and Iran continued. Falling risk assets and a surge in crude oil prices may continue to put pressure on the rupee, they said.

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At the interbank foreign exchange market, the rupee opened on a negative note at 95.89 against the American currency. During the day, the local unit slipped further to close at 96.03 (provisional), down 28 paise from its previous close.

On Friday, the rupee appreciated 24 paise to close at 95.75 against the US dollar.

“The Indian rupee declined by nearly 20 paise on risk-off sentiment in global markets after the US rejected a deal proposal by Iran, diminishing hopes of the reopening of the Strait of Hormuz. Brent crude oil breached the USD 108 per barrel mark while global equities tanked. The US dollar and US Treasury yields also strengthened,” said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.

Choudhary further added that the rupee is expected to trade with a negative bias as global risk sentiment deteriorated amid the continued stalemate between the US and Iran.

“Falling risk assets and a surge in crude oil prices may continue to put pressure on the rupee. However, any intervention by the RBI may support the rupee at lower levels,” Choudhary said, adding that traders may take cues from speeches by various FOMC members.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, traded at 101.12, up 0.16 per cent.

Brent crude futures, the global oil benchmark, were trading 3.57 per cent higher at USD 108.04 per barrel in futures trade.

On the domestic equity market front, the Sensex tumbled 1,124.02 points to settle at 72,771.72, while the Nifty was down 360.25 points to close at 22,780.25.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,693.93 crore on a net basis on Friday, according to exchange data.

Meanwhile, India’s forex reserves dropped USD 14.881 billion to USD 765.901 billion during the week ended September 18 due to a fall in foreign currency assets, according to RBI data released on Friday.