Indian Rupee Falls 42 Paise Against US Dollar Amid Global Risk Aversion

The Indian rupee experienced a sharp decline of 42 paise to settle at 91.50 (provisional) against the US dollar on Monday, following increased global risk aversion due to US and Israeli attacks on Iran. The rupee opened at 91.23 and touched an intraday low of 91.65 against the greenback before ending the session at 91.50.

Market Analysis

The decline in the rupee can be attributed to massive selling in domestic equity markets and withdrawal of foreign funds. Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, stated that the rupee declined nearly half a per cent due to risk aversion in global markets. The FII outflows and overnight gains in crude oil prices further pressured the rupee, which is expected to trade with a negative bias on risk-off sentiments in global markets amid heightened geopolitical tensions.

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Support for the Rupee

However, any diplomatic talks between the US and Iran or RBI intervention may support the rupee at lower levels. Traders may also take cues from ISM manufacturing PMI data from the US. The USD-INR spot price is expected to trade in a range of 91.10 to 91.80.

Global Market Trends

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.67% higher at 98.22. Brent crude, the global oil benchmark, was up 8.01% at 78.71 per barrel in futures trade, soaring after the US and Israel launched military strikes against Iran. This may lead to a sharp increase in India's import bill, as the country's 85% fuel requirement is met through imports.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Domestic Equity Market

The Sensex tumbled 1,048.34 points or 1.29% to settle at 80,238.85, while the Nifty tanked 312.95 points or 1.24% to 24,865.70 in early trade. Foreign institutional investors offloaded equities worth ₹7,536.36 crore, according to exchange data.