Mumbai, June 14 The rupee fell 56 paise to 86.08 against the US dollar in early trade on Friday as global oil prices rose and the dollar strengthened amid escalating tensions in the Middle East following Israel’s fresh attack on Iran’s nuclear sites.
Forex traders said a weak start in domestic equity markets and heavy FII outflows contributed to the fall in the local unit.
At the interbank foreign exchange market, the local unit opened at 86.25 against the dollar and then eased to 86.08, down 56 paise from its previous close. The rupee had closed at 85.52 on Thursday.
“The rupee opened weak as hostilities in the Middle East escalated tensions and reduced risk appetite,” said Anil Kumar Bhasali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
“When Israel attacked Iran, sounds of explosions were heard in Tehran, with tensions rising over US efforts to reach a deal with Iran to halt production of material for nuclear bombs,” he said. The dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.31 per cent to 98.22. Meanwhile, at least 265 people were killed on Thursday when a London-bound Air India plane carrying 242 passengers and crew crashed into a medical college campus in Ahmedabad less than a minute after take-off. Several people on the ground were also among the dead in the country’s worst air accident in recent times. In the domestic equity market, the 30-share BSE Sensex fell 1,337.39 points to 80,354.59 in early trade on Friday, while the Nifty fell 415.2 points to 24,473. Global oil benchmark Brent crude futures rose 8.59 per cent to $75.32 per barrel in trade.
Foreign institutional investors (FIIs) sold shares worth Rs 3,831.42 crore on a net basis on Thursday, according to exchange data.
Further, retail inflation in the country fell to a six-year low of 2.82 per cent in May, remaining below the Reserve Bank of India’s (RBI) average target of 4 per cent for the fourth consecutive month, according to government data released on Thursday.
“The rupee is expected to range between 85.70 and 86.25 (for Friday), but this could be an opportunity for exporters to sell their receivables as the RBI will definitely step in to curb volatility. Importers need to wait and watch as the situation evolves,” Bhansali said.
