Mumbai, Sep 28 (PTI) The rupee breached the 96 level for the second time in two weeks before settling 22 paise lower at 95.97 against the US dollar on Monday, amid risk-off sentiment in global markets after the US rejected Iran’s proposal, diminishing hopes of a truce in West Asia.
Forex traders said the global risk sentiment deteriorated as the stalemate between the US and Iran continued, leading to a surge in crude oil prices and massive withdrawal of foreign funds from domestic equity markets, weighing on the Indian currency.
At the interbank foreign exchange market, the rupee opened on a negative note at 95.89 and hit the intraday low of 96.05 against the American currency.
The unit touched the day’s high of 95.87 before ending the session at 95.97 against the greenback, registering a 22 paise fall from its previous close.
On Friday, the rupee appreciated 24 paise to close at 95.75 against the US dollar.
The rupee breached the crucial 96 level for the second time since September 17, when it slid to 96.10 to a dollar during intraday after a 25 basis point rate hike by the US Federal Reserve.
“The Indian rupee declined by nearly 20 paise on risk-off sentiments in global markets after the US rejected a deal proposal by Iran, diminishing hopes of reopening the Strait of Hormuz. Brent crude oil breached the USD 108 per barrel mark while global equities tanked. US dollar and US Treasury yields also strengthened,” said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.
Choudhary further added that the rupee is expected to trade with a negative bias as global risk sentiments deteriorated with the continued stalemate between the US and Iran.
“Falling risk assets and surge in crude oil prices may continue to pressurise the rupee. However, any intervention by the RBI may support the rupee at lower levels,” Choudhary said, adding that traders may take cues from speeches by various FOMC members.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, traded at 101.12, up 0.16 per cent.
Brent crude futures, the global oil benchmark, were trading higher by 3.57 per cent at USD 108.04 per barrel in futures trade.
On the domestic equity market front, Sensex tumbled 1,124.02 points to settle at 72,771.72, while the Nifty was down 360.25 points to close at 22,780.25.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,353.22 crore on a net basis on Monday, according to exchange data.
Government data released on Monday showed India’s industrial output increased by 8 per cent in August from 7.4 per cent in the preceding month, mainly due to a good show by the manufacturing sector. PTI DRR HVA
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