Business Desk – Rupee-Dollar Rate: The Indian rupee weakened by 7 paise against the US dollar in early trade on August 13 to Rs 95.40 per dollar. Investor sentiment remains weak in the Forex market. The effect of increasing tension in the market regarding US-Iran Tension and Strait of Hormuz is visible on the rupee.
The rupee opened at 95.40 per dollar in the Interbank Foreign Exchange Market. Earlier on Wednesday, the Indian currency had closed at 95.33 per dollar. That is, a fall of 7 paise was recorded in the rupee in early trade.
US-Iran tension increases market concerns
According to Foreign Exchange Traders, the standoff between America and Iran does not seem to be ending. Iran has warned to keep the Strait of Hormuz closed until 2029. Whereas US President Donald Trump says that America has control over Hormuz.
The Strait of Hormuz is included in the world's major oil supply routes. In such a situation, increasing tension here may increase concerns in the market regarding the supply and prices of crude oil. This may also affect the currencies of Emerging Markets.
Dollar Index crosses 100
The Dollar Index, which measures the strength of the US dollar against six major currencies of the world, stood at 100.01. Due to strengthening of dollar, pressure on emerging market currencies like rupee may increase.
Sensex and Nifty also in decline
There was a decline in the domestic stock market in early trade amid the weakness in the rupee. Sensex fell 152.97 points to 77,813.38. Nifty was trading at 24,351.15 with a fall of 84.80 points. Amidst the weakness in the market, selling by foreign investors also remains an important factor.
FII sold shares worth Rs 1,002 crore
According to Stock Market Data, foreign institutional investors i.e. FIIs sold shares worth a net Rs 1,002.50 crore in the Indian stock market on Wednesday. Continuous selling by foreign investors may affect liquidity and sentiment in the domestic market. Investors will now keep an eye on FII Flow and Global Market Trends.
Crude Oil Price $87.89 per barrel
Meanwhile, International Oil Benchmark Brent Crude Futures fell 1.22% to $ 87.89 per barrel. However, the price of crude oil still remains at a high level.
India imports a major part of its crude oil requirement. Therefore, both Crude Oil Price and Rupee-Dollar Rate can have an impact on the country's Import Bill, Inflation and costs of companies.
Now which factors are important for the rupee?
In the coming business, US-Iran Tension, Strait of Hormuz, Dollar Index, Crude Oil Price, FII Selling and Stock Market Trend will be the major factors determining the direction of the rupee. At present the rupee is trading at the level of 95.40 per dollar. The market will be keeping an eye on what level the Indian currency closes at by the end of the day amid selling by foreign investors and geopolitical tensions.