Rupee slumps 26 paise to 73.83 on rising crude prices
Rupee continued to be under pressure as oil prices started to move-up.
Mumbai: The rupee snapped its three-session gaining streak to end 26 paise lower at 73.83 against the US dollar on Monday after crude prices rose amid intensifying geopolitical tensions.
Dealers said a spurt in dollar demand from importers dragged down the domestic currency. At the Interbank Foreign Exchange (Forex), the rupee opened lower at 73.80 and lost further ground to hit an intra-day low of 74.07 against the US dollar on strong demand for the American currency from importers.
However, the rupee clawed back some lost ground and finally settled the day at 73.83, down by 26 paise, posting its first loss after three consecutive days of gain at the interbank foreign exchange market.
"Rupee continued to be under pressure as oil prices started to move-up due to sudden spurt in tension between the US and Saudi Arabia," said Vinod Nair, Head of Research, Geojit Financial Services.
Brent crude, the international benchmark, was trading higher by 0.98 per cent, at USD 81.79 per barrel as investors were worried over US relations with the world's top oil producer Saudi Arabia over the disappearance of journalist Jamal Khashoggi.
On Friday, the rupee had zoomed 55 paise to 73.57, marking the biggest jump in over three weeks. Unabated foreign fund outflows also dragged down the domestic currency. Foreign institutional investors (FIIs) sold shares to tune of Rs 1,322 crore Friday, provisional data showed. Forex traders believe the weakness in rupee was owing to rising crude oil prices.
Moreover, subdued trend at other Asian markets, following worries over Sino-US trade disputes, a possible slowdown in the Chinese economy and signs of tighter monetary policy by the US Federal Reserve also had an impact on the trading sentiment.
"We look for the USD/INR to head towards 75.0 factoring in our base case of at least four hikes by the US Fed over the year, which will be dollar and rates positive," DBS Bank Economist Radhika Rao said in a research note.
The Financial Benchmarks (India) Ltd set the reference rate for the dollar at 73.9708 per dollar. The reference rate for euro was fixed at 85.4895 and for the British pound at 97.0832. The reference rate for Japanese yen was 66.08 per 100 yen.