Rupee falls 45 paise as crude oil surges amid US-Iran tensions
The rupee weakened by 45 paise against the US dollar in early trade as Brent crude prices surged above USD 101 per barrel following renewed tensions near the Strait of Hormuz. Rising oil prices and weak market sentiment also weighed on domestic equities.
Mumbai: The rupee depreciated 45 paise to 94.67 against the US dollar in early trade on Friday, as Brent crude prices rose back to USD 101.00 per barrel after US and Iranian forces exchanged fire near the Strait of Hormuz.
Forex traders said investor sentiments were affected after Iran accused the US of violating the ceasefire as the US carried out retaliatory strikes with new attacks, which took place in the Strait of Hormuz and civilian areas, while President Donald Trump said the ceasefire was still in effect.
Brent oil prices, which had fallen to USD 98 per barrel amid the US-Iran peace deal, edged higher to USD 101 per barrel as investors weighed the prospects for a Middle East peace deal.
At the interbank foreign exchange market, the rupee opened at 94.58 against the US dollar, then lost momentum and touched 94.67 against the American currency, registering a fall of 45 paise over its previous close.
On Thursday, the rupee pared initial losses and settled the day on a positive note, up 27 paise at 94.22 against the greenback.
“Brent oil prices moved higher by more than 2 per cent in Asian trade on Friday after US and Iranian forces exchanged fire near the Strait of Hormuz despite President Trump insisting that the month-old ceasefire remained in effect,” said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
Bhansali further added that the rise in oil prices took USD/INR higher towards 94.43 this morning in Asian trading, and the dollar index also moved higher towards 98.22 while Asian currencies were a tad weaker.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 98.20, up 0.14 per cent.
Brent crude, the global oil benchmark, was trading higher by 1.08 per cent at USD 101.14 per barrel in futures trade.
On the domestic equity market front, Sensex declined 353.50 points to 77,491.02 in early trade, while the Nifty dropped 109.25 points to 24,225.20.
Foreign Institutional Investors offloaded equities worth Rs 340.89 crore on Thursday, according to exchange data.
