Mumbai, Jul 7 (PTI) The rupee logged a steep fall of 54 paise to settle at 85.94 against the US dollar on Monday amid rising global crude oil prices and a strong American currency.
Subdued sentiment in domestic equities due to uncertainties over US President Donald Trump’s trade tariffs put further pressure on the local unit, according to forex traders.
At the interbank foreign exchange, the domestic currency opened at 85.53 against the greenback and traded in a wide range of 85.51-86.03 before settling at 85.94, lower by 54 paise from its previous close.
The rupee rose 15 paise to settle at 85.40 against the US dollar on Friday, a day after registering a gain of 7 paise on Thursday.
The rupee fell on constant buying by oil companies and importers as Saudi Arabia raised oil prices for Asian deliveries despite increase in output for the month of August and expectations for an increase of the output in September, Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
“Trump’s (tariff) deadline of July 9 was approaching and there has been no sign of India-US trade deal happening… the rupee has fallen as the market is not expecting the deal to be done soon and the US could impose additional duties on India exports,” he said.
Meanwhile, US President Donald Trump has also threatened to impose an additional 10 per cent tariff on countries aligning themselves with the “anti-American” policies of the BRICS grouping. Leaders of the BRICS are meeting in Brazil for the 17th BRICS Summit on July 6-7.
Dilip Parmar, Research Analyst, HDFC Securities, said the rupee’s “downturn is primarily attributed to weakened market sentiment following the recent pronouncements by the US President regarding a prospective extra 10 per cent tariff on BRICS” countries.
“The USD-INR pair is anticipated to exhibit a continued southward trajectory until greater clarity emerges concerning the proposed trade agreements with US,” Parmar said, adding, “The prevailing market bias indicates a favourable outlook for the US Dollar against the Indian rupee.” The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.24 per cent to 97.41.
Brent crude, the global oil benchmark, was up 0.26 per cent to USD 68.48 per barrel in futures trade.
The domestic equity market stayed largely flat with the Sensex closing up 9.61 points at 83,442.50, while Nifty ending almost unchanged at 25,461.30.
Foreign institutional investors (FIIs) purchased equities worth Rs 321.16 crore on a net basis on Monday, according to exchange data.
India’s forex reserves were up USD 4.84 billion to USD 702.78 billion for the week ended June 27, the Reserve Bank of India said on Friday. PTI TRB HVA
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