Mumbai, April 9 The rupee depreciated by 17 paise to 92.71 against the US dollar in early trading on Thursday as the fragile ceasefire and Iran's threat to withdraw from talks if Israel continued bombing Lebanon kept investors wary.
Forex traders said that the market is in a wait-and-see mode rather than strong directional positioning, as the situation in West Asia remains fragile.
Geopolitical uncertainty remained high amid Iran's threat to withdraw from talks if Israel continued bombing Lebanon, keeping investors wary of the opening of the Strait of Hormuz.
At the interbank foreign exchange market, the rupee opened at 92.63 against the US dollar, then gained ground to touch 92.71 against the US dollar in initial trading, registering a gain of 17 paise over its previous close.
On Wednesday, the rupee had settled at 92.54 against the American currency.
Iran closed the Strait of Hormuz again in response to Israeli attacks in Lebanon. The White House demanded that the channel be reopened and sought to keep peace talks on track.
"The fragile ceasefire could be jeopardized by renewed Middle East tensions as Israel struck Lebanon and Iran warned of moving out of the ceasefire if strikes against Lebanon continued," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
This caused the dollar index to rise to 99.10, with the Euro and GBP both falling against the dollar. Asian currencies also fell from their Wednesday highs.
The RBI left interest rates unchanged on Wednesday but flagged risks to the Indian economy from disruptions caused by the Iran war, Bhansali noted.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.10 per cent at 99.03.
Brent crude, the global oil benchmark, was trading higher by 1.93 per cent at USD 96.52 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex dropped 243.57 points to 77,319.33 in opening trade, while the Nifty declined 88.3 points to 23,909.05.
Foreign Institutional Investors offloaded equities worth Rs 2,811.97 crore on Wednesday, according to exchange data.
Meanwhile, India's Foreign Secretary Vikram Misri met senior US officials here and discussed ways to further deepen the defence and trade relations and exchanged views on the developments in the Indo-Pacific and West Asia.
On a three-day visit here, Misri met under secretaries Michael Duffey and Elbridge Colby in the Department of Defence, and under secretaries Jeffrey Kessler and William Kimmitt in the Department of Commerce.
Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
The information provided is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Readers are advised to rely on their own assessment and judgment and consult appropriate financial advisers, if required, before taking any investment-related decisions.
Any views, opinions, or statements expressed, where applicable, are those of the respective analysts or experts and do not reflect the views of this website. The website has no association with such viewpoints and does not assume any responsibility for them.