Rupee Under Pressure: Currency Falls To 96.03 As Crude Jumps And Stocks Tumble

The rupee came under renewed pressure on Monday, slipping 28 paise to close at 96.03 against the US dollar, as a worsening global risk mood, surging crude prices and the continuing US-Iran standoff weighed on investor sentiment.

The Indian currency opened at 95.89 against the dollar at the interbank foreign exchange market and weakened further during the session. The fall came a day after the rupee had gained 24 paise to close at 95.75 on Friday.

Market sentiment deteriorated after the US rejected a deal proposal from Iran, reducing hopes of an early resolution and the reopening of the strategically important Strait of Hormuz. The uncertainty triggered a broader shift away from riskier assets while oil prices climbed sharply.

“Global risk sentiments deteriorated as the stalemate between the US and Iran continued,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan. He noted that Brent crude breached $108 a barrel, while global equities came under heavy selling pressure.

Choudhary said the rupee could continue to trade with a negative bias if geopolitical tensions persist. Higher crude prices are particularly important for India because the country relies heavily on imported oil, making a sustained rise in international prices a potential pressure point for the import bill and the currency.

However, possible intervention by the Reserve Bank of India could provide support to the rupee at weaker levels, he said. Traders are also expected to track comments from members of the US Federal Open Market Committee for clues on the future direction of US monetary policy.

The dollar index rose 0.16 per cent to 101.12, while Brent crude futures climbed 3.57 per cent to $108.04 a barrel.

The pressure extended to Indian equities, with the Sensex plunging 1,124.02 points to 72,771.72 and the Nifty falling 360.25 points to 22,780.25.

Foreign investors also remained cautious, selling Indian equities worth Rs 3,693.93 crore on a net basis on Friday.

Adding to the concerns, India's foreign exchange reserves fell by $14.881 billion to $765.901 billion in the week ended September 18, according to RBI data.