INTRO
Rising crude oil prices and Middle East tensions pushed the rupee lower, as stronger dollar demand added pressure on currency markets.
MUMBAI
The Indian rupee fell 38 paise to close at 95.92 against the US dollar, pressured by escalating tensions in the Middle East, rising crude oil prices and a stronger dollar.
The rupee opened at 95.84 at the interbank foreign exchange market before weakening during the session. Traders said increased dollar demand from oil importers raised concerns over inflation and India’s external trade balance.
Brent crude rose 1.92 per cent to $107.71 a barrel in futures trading, with oil prices reaching around $108 amid fears of supply disruptions through the Strait of Hormuz.
Weak domestic equities, rising global Treasury yields and a strong US dollar also weighed on investor sentiment. The dollar index was trading 0.22 per cent higher at 99.61.
Market analysts expect the rupee to remain under pressure amid global risk-off sentiment and elevated crude prices. However, possible intervention by the Reserve Bank of India could provide support to the currency at lower levels.
Investors are also expected to remain cautious ahead of the US Federal Open Market Committee’s policy decision on Wednesday. The USD-INR spot rate is expected to trade between 95.75 and 96.15.
On the domestic equity market, the Sensex fell 777.94 points to 74,003.82, while the Nifty declined 279.50 points to 23,118.60.
Meanwhile, India’s foreign exchange reserves surged by $44.903 billion to a record $785.706 billion in the week ended September 4, according to RBI data.