Rupee falls 25 paise to settle at 93.16 against US dollar

The rupee fell 25 paise to 93.16 against the United States dollar amid West Asia tensions and rising crude concerns. Disruptions near the Strait of Hormuz increased dollar demand, keeping the local currency under pressure despite earlier gains

Mumbai: The rupee pared its initial gains and settled with a loss of 25 paise at 93.16 against the US dollar on Monday, after fresh tension in West Asia led to an increased demand for the American currency and kept crude prices steady. Forex traders said the local currency remained under pressure due to a fresh standoff between the US and Iran that led to a closure of the Strait of Hormuz, disrupting global supply.

At the interbank foreign exchange market, the rupee opened at 92.73 and touched an intra-day high of 92.70 against the greenback. It also hit the day’s low of 93.24 during the session before settling at 93.16 against the dollar, registering a loss of 25 paise from the previous closing level.

The rupee strengthened 28 paise to settle at 92.91 against the US dollar on Friday, a day after gaining 19 paise in the preceding session on Thursday. Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, said the rupee fell on a strong dollar and a surge in crude oil prices as global risk sentiments deteriorated after Iran said it closed the Strait of Hormuz again.

Choudhary said the rupee is expected to trade with a negative bias on renewed geopolitical tensions between the US and Iran. “However, the ceasefire between Israel and Lebanon may support the rupee at lower levels. USD-INR spot price is expected to trade in a range of Rs 93 to Rs 93.60.” According to Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, rupee traded weaker as uncertainty around the second round of US-Iran talks continues to weigh on sentiment.

“The rebound in crude, driven by disruptions around the Strait of Hormuz, is increasing concerns over India’s import bill and keeping pressure on the rupee. Given the sensitivity of INR to oil prices and geopolitical developments, the overall bias remains cautious. In the near term, rupee is expected to trade in a range of 92.65-93.45,” Trivedi said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.14 per cent to 98.03.

Brent crude, the global oil benchmark, was trading 4.64 per cent down at USD 94.57 per barrel in futures trade.
Analysts said the crude price bounced back from below the USD 90-a-barrel level reached on Friday, as the geopolitical situation turned volatile after a fresh standoff between the US and Iran prevented ships from crossing the Strait of Hormuz.
Domestic equity markets stayed almost flat, with the 30-share Sensex ending 26.76 points, or 0.03 per cent, up at 78,520.30, while the Nifty inching up 11.30 points, or 0.05 per cent, to 24,364.85. Foreign Institutional Investors bought equities worth about Rs 2,066 crore on Monday, according to NSDL data.