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Rupee drops 32 paise to close at two-weeks low against US dollar after spike in crude oil prices

Mumbai: The rupee Monday plunged by 32 paise to close at a two-week low of 69.67 against the US dollar following a spike in crude oil prices on reports that the US will end waivers on Iranian oil imports.

A fall in domestic equity markets also weighed on the rupee.

A weak US dollar against major global currencies capped losses of the domestic currency.

At the Interbank Foreign Exchange (forex), the rupee opened sharply lower at 69.78 and touched a low of 69.88 against the dollar in early trade. But it pared early losses later and rose to an intra-day high of 69.50.

The domestic currency, however, failed to sustain gains and finally settled at 69.67 per dollar, down 32 paise or 0.46 percent over its previous closing. The rupee had previously closed at this level on 8 April.

"The rupee has been under pressure today due to a sharp rise in crude oil prices in the international market. Profit booking in the domestic equity ... has also pressurized the rupee," said Rushabh Maru, Research Analyst - Currency and Commodity, Anand Rathi Shares and Stock Brokers.

The domestic unit drops to a month low due to a sharp increase in crude oil prices threatens to fuel inflation and boost the nation's import bill. It touched 69.88, the lowest level since 11 March, 2019, VK Sharma, Head PCG & Capital Markets Strategy, HDFC Securities, said.

 Rupee drops 32 paise to close at two-weeks low against US dollar after spike in crude oil prices

Representational image. Reuters.

Reacting to reports on Iran sanctions, global benchmark Brent crude climbed to a multi-month high of $73.81 per barrel, a 2.56 percent rise.

"Oil extended gains today after the longest weekly winning streak in almost four years, as the US government was said to announce that it won't renew waivers, allowing buyers to import Iranian crude. India is one of the countries that enjoy waivers. Brent crude oil prices rose as much as 3.30 percent to $74.31 in earlier today morning...," he added.

The rupee Thursday had gained 25 paise to 69.35 against the US dollar after three sessions of losses.

The currency market was closed on Friday on account of 'Good Friday'.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell marginally by 0.06 percent to 97.32.

Meanwhile, BSE Sensex settled 495.10 points, or 1.26 percent, lower at 38,645.18; while the broader NSE Nifty tumbled 158.35 points, or 1.35 per cent, to close at 11,594.45.

Foreign institutional investors (FIIs), however, remained net buyers in the capital markets, putting in Rs 73.08 crore on Monday, provisional exchange data showed.

"FIIs in the last week continued pumping money into Indian equities, with foreign flows into India-focused ETFs maintaining the momentum. The Indian debt market though, saw net FII outflows," Rajesh Cheruvu, the Chief Investment Officer of WGC Wealth commented.

Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 69.7423 and for rupee/euro at 78.4076. The reference rate for rupee/British pound was fixed at 90.6362 and for rupee/100 Japanese yen at 62.32.

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Updated Date: Apr 22, 2019 18:11:48 IST