MUMBAI, Apr 22: Falling for the third straight session, the rupee declined 34 paise to close at 93.78 against the US dollar on Wednesday as uncertainty over US-Iran peace talks eroded hopes of easing West Asia tensions and set crude oil prices on fire.
Intense selling in domestic equity markets and sustained outflow of foreign capital also weighed on the domestic currency, forex traders said.
At the interbank foreign exchange market, the rupee opened at 93.69 and touched an intraday low of 93.87 against the greenback during the session.
The domestic unit finally ended the session at 93.78 against the dollar, registering a loss of 34 paise from the previous close.
On Tuesday, the rupee plunged 28 paise to settle at 93.44 against the US dollar, a day after losing 25 paise on Monday. The currency had gained 47 paise in the preceding two sessions.
Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, said the rupee declined on an overnight surge in crude oil prices and uncertainty over US-Iran talks.
He further said that the rupee is expected to trade with a negative bias amid FII outflow pressure. “However, softening of the US dollar may prevent a sharp fall in the rupee. USD-INR spot price is expected to trade in a range of Rs 93.60 to Rs 94.20.”
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, went down 0.07 per cent to 98.15.
Brent crude, the global oil benchmark, was trading 1.29 per cent higher at USD 99.75 per barrel in futures trade.
Analysts said the crude prices climbed after two ships came under attack in the Strait of Hormuz on Wednesday, complicating efforts to end the war. The fresh attacks came days after the US seized an Iranian container ship.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said that rising crude oil prices and ongoing geopolitical uncertainty kept pressure on the Indian currency.
“The dollar remains steady near 98, while uncertainty around US-Iran developments continues to keep markets cautious, with both escalation and de-escalation possibilities still on the table,” he said, adding that the “rupee is expected to trade in a range of 93.25-94.50” in the near term.
Meanwhile, US President Donald Trump threatened to bomb Iran in the absence of a peace agreement before the two-week ceasefire reached its deadline. Trump has said that if the ceasefire ends without an agreement, he is prepared to resume attacking Iran. “I expect to be bombing because I think that’s a better attitude to go in with,” he told CNBC’s ‘Squawk Box’.
In the domestic equity markets, the 30-share Sensex crashed 756.84 points or 0.95 per cent to settle at 78,516.49, while the Nifty tanked 198.50 points or 0.81 per cent to 24,378.10.
Foreign Institutional Investors offloaded equities worth about Rs 2,078.36 crore on Wednesday, according to the exchange data. (PTI)
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