Rupee sinks 23 paise to close at 86.78 against US dollar

Mumbai: The rupee plunged 23 paise to close at a five-month low of 86.78 against the US dollar on Monday amid a strengthening greenback and volatile crude oil prices following the US strike on Iran’s nuclear facilities.

Lacklusture sentiment in the domestic equity markets and outflow of foreign capital further pressured the rupee, according to forex experts.

At the interbank foreign exchange the rupee opened at 86.75 and traded in the range of 87.67 to 86.85 before settling at its five-month low of 86.78 against the greenback, down 23 paise from its previous close of 86.55 on Friday.

The rupee had earlier recorded the low level on January 13 when it had closed at 86.70 against the dollar.

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“The rupee fell to 86.85 due to higher oil prices in the morning and then oil started to fall and gave importers an opportunity to buy dollars for their near-term imports. The rupee rose to 86.67 but was not able to rise any further as oil demand was quite high,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

“The rupee went back to 85.82 where the Reserve Bank was a seller and kept the rupee movement on hold beyond today’s low,” he said.

According to Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan, the rupee declined on weak domestic markets and geopolitical uncertainty. Surge in crude oil prices and selling pressure from foreign investors too weighed on the rupee. US dollar strengthened amid safe haven demand on geopolitical tensions in the Middle East.

“Traders may take cues from PMI and existing home sales data from the US. USD-INR spot price is expected to trade in a range of Rs 86.40 to Rs 87,” Choudhary added.

Brent crude, the global oil benchmark, rose 0.08 per cent to USD 77.07 per barrel in futures trade.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.60 per cent higher at 99.29.

In the domestic equity market, the 30-share BSE Sensex tanked 511.38 points to settle at 81,896.79 while Nifty dropped 140.50 points to 24,971.90.

Foreign institutional investors (FIIs) offloaded equities worth Rs 1,874.38 crore on a net basis on Monday, according to exchange data.

The latest weekly data released by the Reserve Bank of India on Friday showed India’s forex reserves rising USD 2.294 billion to USD 698.95 billion during the week ended June 13.

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