Rupee Plunges Amid US-Iran Tensions as Hormuz Standoff Hits Global Markets
The Indian Rupee pared its recent gains, settling with a loss of 19 paise at 93.10 (provisional) against the US dollar on Monday. The slide was driven by fresh geopolitical tensions in West Asia, which significantly increased global demand for the American dollar.Forex traders noted that the local currency remained under pressure following the standoff between the US and Iran. This incident created concerns over the potential closure of the critical Strait of Hormuz, thereby disrupting global supply chains.
Rupee Takes Hit From Geopolitical Fallout
At the interbank foreign exchange market, the rupee displayed significant intraday volatility. It opened at 92.73 against the greenback and briefly touched an intra-day high of 92.70.However, the pressure mounted, pushing the rupee to a day's low of 93.24 before settling at 93.10. This marks a 19 paise loss from the previous day's closing rate.
The rupee's recent movement showed sharp swings, having strengthened 28 paise to close at 92.91 last Friday. This followed a preceding gain of 19 paise the week before.
Analysts Predict Negative Bias for INR
Market experts suggest that the rupee is poised to continue trading with a negative bias due to renewed geopolitical friction between the US and Iran. However, a potential ceasefire between Israel and Lebanon could offer some support to the currency at lower levels.Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, observed that the rupee's weakness was fueled by a combination of a strong dollar and rising crude oil prices. He anticipates that the USD-INR spot price will trade within a range of Rs 93 to Rs 93.60.
Oil Prices and Dollar Index React to Volatility
The global picture remained volatile, with the US dollar index rising by 0.14 per cent to 98.03. This index gauges the greenback's strength against a basket of six currencies.Meanwhile, crude oil futures also reflected the tensions. Brent crude, the global oil benchmark, was trading 4.64 per cent down at USD 94.57 per barrel.
Analysts pointed out that the volatile situation, stemming from the US-Iran standoff and the disruption of the Strait of Hormuz, caused crude prices to bounce back from below the USD 90-a-barrel level seen on Friday.
Domestic Markets Show Stability Despite External Pressure
Domestic equity markets remained relatively flat despite the choppy currency and commodity movements. The 30-share Sensex finished the day 26.76 points higher, or 0.03 per cent, at 78,520.30.Similarly, the Nifty index edged up 11.30 points, or 0.05 per cent, concluding at 24,364.85.
In institutional activity, exchange data showed that Foreign Institutional Investors bought equities worth Rs 683.20 crore on Friday.
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