Rupee Dips to 95.35 Despite Friday Gains as Geopolitical Risks Weigh
The rupee weakened to 95.35 against the US dollar amid geopolitical tensions and US currency strength. Brent crude prices surged due to Iran's missile attack on Israel, adding instability and pressure on the Indian rupee.
Highlights
- •Rupee Drops: Fell by 17 paise in early trade of Monday to 95.35 against US dollar.
- •Geopolitical Uncertainty: Tensions between US and Iran raised concerns over regional stability, impacting market sentiment and rupee value.
- •Brent Crude Surge: Prices increased by 3.43 per cent after Iranian missile launch towards Israel, driving up the dollar index.
- •Domestic Market Down: Sensex fell 724.95 points to 73,518.39 and Nifty dropped 222.45 points to 23,138.60.
Mumbai: The Indian rupee weakened by 17 paise to 95.35 against the US dollar in early trading on Monday due to geopolitical tensions and strength of the US currency. Elevated Brent crude prices and concerns over the stability of West Asia heightened market jitters, contributing to a dip in investor sentiment.
Global Market Influences
The rupee's fall is linked to broader global economic factors. The dollar index rose to 95.33, marking a gain of 0.42 per cent. Meanwhile, the Brent crude benchmark surged by 3.43 per cent to USD 96.28 per barrel after Iran launched missiles towards Israel, sparking geopolitical fears.
CR Forex Advisors MD Amit Pabari noted that although the Israeli authorities reported no casualties and all missiles were intercepted, markets remain cautious amid ongoing tensions between the US and Iran. He predicted a medium-term positive outlook for the USD/INR pair but warned of potential reversals if there are further escalations in regional conflicts.
The rupee opened at 95.35 against the dollar on Monday, reflecting its Friday close at 95.18 after gaining 56 paise, marking its best single-day performance since mid-March.
In the domestic equity market, the Sensex dropped significantly with a loss of 724.95 points to 73,518.39 in early trading on Monday. The Nifty index also saw a decline of 222.45 points to 23,138.60.
Foreign institutional investors withdrew Rs 8,776.25 crore from Indian equities on a net basis the previous day, according to exchange data. The Reserve Bank reported that India's foreign exchange reserves increased by USD 938 million to USD 682.321 billion for the week ending May 28.
US President Donald Trump advised caution in response to Iran's missile attack, urging Prime Minister Benjamin Netanyahu of Israel not to retaliate to avoid jeopardizing ongoing peace talks for the Middle East conflict.
