Rupee slips 16 paise as West Asia tensions flare up; ends at 86.74/$

Indian Rupee today: The domestic currency depreciated 16 paise to end at 86.74 against the dollar, after closing at 86.59 on Friday

The Indian rupee fell after a day of advance as the US strikes at nuclear sites in Iran triggered a risk-off sentiment among investors. 

 

The domestic currency depreciated 16 paise to end at 86.74 against the dollar, after closing at 86.59 on Friday, according to Bloomberg. The currency has fallen 1.32 per cent so far this month. 

 

Rupee traded weak as the dollar index appreciated toward the 99 mark, indicating broader currency market imbalances, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. Geopolitical tensions escalated after the US conducted airstrikes on three nuclear-related sites in Iran, raising volatility across global markets, he said. 

 

 

Participants are likely to stay cautious and track macro developments closely, Trivedi said. "Technically, the rupee remains weak below 86.00, with the next support seen near 87.00." 

 

Iran’s Parliament has reportedly approved the closure of the Strait of Hormuz after the US struck three nuclear sites over the weekend. US President Donald Trump declared the three facilities “totally obliterated,” and warned of greater attacks unless Iran makes peace with Israel. 

 

Crude oil prices pared gains after it rose as much as 5.7 per cent during the session. Brent crude price was up 0.25 per cent at $77.20 per barrel, while WTI crude prices were higher by 0.28 per cent at 74.05, as of 3:30 PM IST.

 

Despite India's reliance on Iranian oil, it has diversified its sourcing from Russia and the US, reducing its dependence on the Gulf, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "However, higher oil prices could impact the current account, potentially weakening the rupee slightly. "

 

The Reserve Bank of India (RBI) is likely to intervene to maintain market stability, and its forex reserves have reached $698 billion, nearing the all-time high of $705 billion, providing an ample buffer, Bhansali said.

 

Meanwhile, after depreciating 1.29 per cent against the dollar this financial year, the rupee is expected to weaken more because of West Asian military conflicts, with the expectation that prices of crude oil will rise. According to a Business Standard poll, the majority of the respondents expect the rupee to depreciate to 87 a dollar by the end of July.

 

The US dollar index, which measures the greenback against a basket of six major currencies, was up 0.57 per cent at 99.268.