Currency Market News: Rupee drops to 86.08 vs dollar as oil prices surge, Middle East tensions escalate
According to Forex Traders, the domestoc unit also came under pressure due to a weak opening in domestic equities and sustained foreign institutional investor (FII) outflows.
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10:55 AM IST
Rupee weakened by 56 paise to 86.08 against the US dollar in early trade on Friday, hit by a sharp spike in global crude oil prices and escalating geopolitical tensions following a fresh Israeli strike on Iran’s nuclear sites.
Forex traders said the local unit also came under pressure due to a weak opening in domestic equities and sustained foreign institutional investor (FII) outflows. At the interbank foreign exchange market, the rupee opened at 86.25 before recovering slightly to 86.08. It had closed at 85.52 on Thursday.
“The rupee opened weak as hostility in the Middle East kept tensions boiling and risk appetite taking a hit, with Gift Nifty down 285 points,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, as quoted by PTI.
The dollar index, which measures the US currency against a basket of six major currencies, rose 0.31 per cent to 98.22, adding further pressure on the rupee.
Stock market slides amid geopolitical tensions
Equity markets mirrored global nervousness, opening sharply lower on Friday, June 13. The Nifty dropped 1.4 per cent to 24,508, while the Sensex tumbled 1,093 points or 1.34 per cent to 80,599. The Bank Nifty index also declined significantly, shedding 900 points or 1.61 per cent to open at 55,180.65.
Brent crude futures surged 8.59 per cent to $75.32 per barrel, as fears of supply disruptions from the Middle East intensified following the latest conflict escalation between Iran and Israel.
FIIs remained net sellers, offloading equities worth Rs 3,831.42 crore on Thursday, according to provisional exchange data.
Also Read:First Trade: Nifty slumps to 24,500 levels, ONGC only gainer from bluechip index
Inflation Falls to six-year low
Amid the turmoil, there was a silver lining on the macroeconomic front. India’s retail inflation dropped to a six-year low of 2.82 per cent in May, driven by cooling food prices. This marks the fourth straight month that inflation has remained below the Reserve Bank of India’s medium-term target of 4 per cent
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