Rupee weakens amid heightened uncertainty

The rupee slumped by 56 paise to settle at 93.39 (provisional) against the US dollar on Monday after a failed US-Iran peace talk fuelled uncertainties in West Asia, leading to a surge in crude oil prices and a global chase for the greenback.

According to forex analysts, uncertainties over the opening of Strait of Hormuz following the US announcement to blockade Iranian ports further intensified withdrawal for foreign capital from domestic equities, weakening the Indian currency.

At the interbank foreign exchange market, the rupee opened at 93.30 against the US dollar and moved between a low of 93.40 and a high of 93.25 during the session. The unit closed the session at 93.39 (provisional) against the greenback, registering a loss of 56 paise from its previous closing level. On Friday, the rupee settled 32 paise lower at 92.83 against the US dollar. The forex market will be closed on Tuesday on account of Baba Saheb Ambedkar Jayanti.

Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, said the rupee depreciated on risk-aversion in the global markets as talks between the US and Iran failed over the weekend. Surge in crude oil prices and a strong dollar also pressured the rupee. “Rising US dollar and surge in crude oil prices may further pressurise the rupee. FII may also continue to sell from the capital markets. USD-INR spot price is expected to trade in a range of 93-93.80,” Choudhary said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was higher by 0.32 per cent at 98.75. Brent crude, the global oil benchmark, was trading higher by 7.69 per cent at USD 102.52 per barrel in futures trade after the US said it would blockade Iranian ports beginning Monday.

According to the US Central Command, the blockade would be “enforced impartially against vessels of all nations” entering or departing Iranian ports and coastal areas.