Rupee Snaps Seven-Day Gaining Streak Against Dollar As Crude Oil Prices Surge
The rupee on Monday snapped seven-day gaining streak against the U.S. dollar after Saudi drone attacks sent crude oil prices surging. The rupee-dollar exchange rate stood at 71.60 on Monday, a fall of 67 paise from previous close.
Crude oil prices posted their biggest ever intraday jump, briefly surging above $71 a barrel after a strike on a Saudi Arabian oil facility removed about 5 percent of global supplies and raised the spectre of more destabilization in Central Asia. Iran-backed Houthi rebels in Yemen claimed responsibility for the drone attack on Saudi Aramco’s Abqaiq plant.
The opened lower at 71.54, then fell to an intraday low of 71.63, before settling at 71.60, down 67 paise over previous close. A dollar cost Rs 70.92 on Friday.
"The INR and other emerging currencies that rely on huge crude imports have been spooked by this turn of events as the ripple effects on currency are two-fold: one, an increase in imported inflation i.e. rising CPI and two, a hit on the trade deficit," said Rajesh Cheruvu, chief investment officer and Validus Wealth.
Besides, heavy selling in the domestic equity market and sustained foreign outflows also weighed on the domestic currency, forex traders said. The 30-share BSE Sensex fell 0.70 percent, or 261.68 points to 37,123.31 while the broader NSE Nifty shed 0.72 percent, or 79.80 points, to end the day at 10,996.10.
The foreign institutional investors, who were net buyers in the past few sessions, off-loaded shares worth Rs 751.26 crore on Monday, according to provisional exchange data. The 10-year government bond yield was at 6.72 percent on Monday.