Mumbai: Indian rupee weakened further and closed at a record low of 96.35 (provisional) against the US dollar Monday, pressured by rising crude oil prices on the back of ongoing geopolitical tensions and a strong dollar.
Forex traders said the global market sentiments continue to dampen amid simmering tensions between the US and Iran.
Moreover, emerging market economies, including India, continue to feel the pressure of rising crude oil prices, as elevated rates increase the outflows of US dollars, along with the outflows already happening due to FPIs, traders said.
At the interbank foreign exchange market, the rupee opened at 96.19, then fell further to 96.39 against the US dollar, registering a fall of 58 paise from its previous close.
At the end of Monday’s trading session, the rupee was quoted at 96.35(provisional), down 54 paise from its previous close.
On Friday, the Indian rupee crashed below the 96/USD mark Friday before closing at an all-time low of 95.81 against the US dollar.
“We expect the rupee to trade with a negative bias amid a strong dollar and rising US treasury yields. Ongoing geopolitical tensions and FII outflows may also pressure the rupee.
“However, any intervention by the RBI and certain restrictions on the import of gold and silver may support the rupee at lower levels. USDINR spot price is expected to trade in a range of 96 to 96.60,” Anuj Choudhary, Research Analyst, Commodities Research, Mirae Asset Sharekhan, said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.14, lower by 0.14 per cent due to simmering Iran tensions.
Brent crude, the global oil benchmark, was trading up 0.65 per cent at USD 109.97 per barrel in futures trade.
Foreign Institutional Investors remained net buyers for the second straight session, purchasing equities worth Rs 1,329.17 crore Friday, according to exchange data.
India’s forex reserves jumped USD 6.295 billion to USD 696.988 billion during the week ended May 8, the Reserve Bank said Friday. Overall reserves had dropped USD 7.794 billion to USD 690.693 billion in the previous reporting week.
Meanwhile, within days of levying high customs duties on precious metals, the government Saturday imposed import curbs on silver by putting the metal under a licensed regime for inbound shipments.
The government, May 13, hiked import duty on precious metals — gold and silver — from 6 per cent to 15 per cent. The effective duty (including 3 per cent IGST) is over 18 per cent.
It was hiked to control the outflow of forex by curbing non-essential imports.
PTI
