Rupee slides to 95.08 as crude oil tops USD 100

The rupee fell 34 paise to 95.08 against the US dollar as Brent crude crossed USD 100 a barrel amid escalating US-Iran tensions. Weak equities, FII outflows and risk aversion also weighed on the Indian currency on Wednesday

Mumbai: The rupee slumped 34 paise to close at 95.08 (provisional) against the US dollar on Wednesday as crude oil prices crossed the USD 100-per-barrel mark, stoking concerns over inflation and high forex outflows.

Weak equity markets and foreign institutional investor (FII) outflows also pressured the rupee, forex traders said.

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Brent crude futures surpassed USD 100 a barrel for the first time in almost six weeks after attacks on oil facilities and ships in West Asia threatened to weaken the already strained supply chain amid tensions between the US and Iran. Brent crude was trading 2.94 per cent higher at USD 100.73 per barrel.

At the interbank foreign exchange market, the rupee opened at 94.80, which was also its intra-day high, against the US dollar. The local unit fell to an intra-day low of 95.22 as crude oil prices surged. The rupee settled at 95.08 (provisional), down 34 paise from its previous close of 94.74.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 98.84, up 0.05 per cent.

“The rupee declined today on rising crude oil prices and risk aversion in global markets. Brent has breached the USD 100 mark on further escalation of tensions between the US and Iran. FII outflows too pressured the rupee. However, the rupee recovered initial losses on a weak dollar,” said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.

The local currency is expected to trade with a negative bias amid risk aversion in global markets and worries over rising crude oil prices. An escalation in geopolitical tensions between the US and Iran may also pressure the rupee, he added.

The US military destroyed five Iranian oil tankers on Tuesday in response to the latest attacks on its warships, and Iran hit back at American targets in Jordan.

On the domestic equities market front, the Sensex tanked 813.35 points to settle at 74,764.23, while the Nifty was down 203.60 points at 23,431.50.

Foreign institutional investors (FIIs) sold equities worth Rs 123.19 crore on a net basis on Tuesday, according to exchange data.