Rupee Slumps 37 Paise to Close at 96.31 Against US Dollar

The rupee declined 37 paise to close at 96.31 (provisional) against the US dollar on Thursday, slipping below the psychologically important 96-mark amid risk aversion in global markets, rising bond yields and continued foreign investor selling.

At the interbank foreign exchange market, the rupee opened at 95.95 and weakened further to touch an intraday low of 96.34 against the American currency. It eventually settled at 96.31, compared with Wednesday's close of 95.94.

Forex traders said the domestic currency is likely to remain under pressure as global Treasury yields rise and the dollar strengthens. Higher crude oil prices could add to the pressure, given India's dependence on imports.

"We expect the rupee to trade with a negative bias on risk aversion in global markets and worries over rising global treasury yields," said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.

He added that a strong dollar and rising global crude prices could further weigh on the rupee. Uncertainty surrounding a possible US-Iran deal may also exert pressure, while any intervention by the Reserve Bank of India could provide support at lower levels.

The dollar index, which measures the greenback's strength against six major currencies, was trading 0.45 per cent higher at 101.90. Brent crude, the global oil benchmark, rose 2.54 per cent to USD 100.52 a barrel in futures trade.

Domestic equities also witnessed sharp losses. The Sensex fell 570.59 points to 71,909.70, while the Nifty declined 198.50 points to 22,421.95.

According to exchange data, Foreign Institutional Investors sold equities worth Rs 10,148.41 crore on a net basis on Wednesday.

Meanwhile, India's manufacturing sector showed improvement, with the HSBC India Manufacturing PMI rising to 55.1 in September from 52.8 in August, marking a seven-month high.