Rupee fell 39 paise to close at an all-time low of 95.23 (provisional) against the US dollar on Monday, as the ongoing West Asia tensions cause volatility in global markets, keeping oil prices high and raising fears of inflation and economic slowdown.
Forex traders said Brent oil, hovering near $110 per barrel, is maintaining pressure on oil-importing economies such as India. Moreover, factors such as unabated foreign capital outflows amid rising geopolitical uncertainties dented investor sentiments further.
At the interbank foreign exchange market, the rupee opened at 94.95 against the US dollar, then lost ground and finally settled for the day at 95.23 (provisional), registering a fall of 39 paise over its previous close.
On Thursday, the rupee had settled at 94.84 against the American currency.
Stock exchanges and currency markets were closed on Friday on account of Maharashtra Day.
“The Indian rupee has hit a record low as the dollar recovered and crude oil prices held firm. This ongoing surge in oil prices, combined with foreign fund outflows, is putting a visible strain on India’s trade balance and broader economy.
“Persistent dollar demand is expected to keep up the pressure on the rupee in the short term, driving the USD/INR higher toward 95.35 and 95.70 levels,” said Dilip Parmar, Senior Research Analyst, HDFC Securities.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 98.26, up 0.11 per cent.
Brent crude, the global oil benchmark, was trading higher by 1.37 per cent at $109.65 per barrel in futures trade.
Investors’ focus was on counting of votes for the West Bengal state elections, IFA Global said in a research note, adding, “a BJP victory would be positive for domestic assets. However, the impact is likely to be short-lived as global geopolitics will continue to be the driving factor given the direct impact on supply chains and industry.”
On the domestic equity market front, Sensex rallied 355.90 points to settle at 77,269.40, while Nifty climbed 121.75 points to 24,119.30.
Foreign Institutional Investors offloaded equities worth ₹8,047.86 crore on Thursday, according to exchange data.
Meanwhile, Expenditure Secretary V Vualnam on Friday said the upcoming few quarters and the coming year would possibly have a “lot of stress points”.
“The fiscal stress is indeed very much a reality, but at the same time… the capex would really be a priority item, which we would like to preserve and ensure that it continues at the budgeted level,” Vualnam said at the ICPP Growth Conference organised by the Ashoka University.