The rupee weakened 12 paise to 96.42 against the US dollar in early trade on Monday due to a surge in crude oil prices and strong demand for the American currency amid the worsening West Asia crisis.
Foreign capital outflows from domestic equity markets also weighed on the Indian currency, forex traders said.
At the interbank foreign exchange, the rupee opened lower at 96.53 against the previous close of 96.30 to dollar. The local unit pared some losses to trade at 96.42 later, down 12 paise from its previous close.
On Friday, the rupee gained 12 paise to settle at 96.30 against the US dollar, supported by positive domestic market sentiment and a decline in US Treasury yields.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading marginally down by 0.05 per cent at 100.54.
Brent crude, the global oil benchmark, was trading 2.45 per cent higher at USD 90.26 per barrel in futures trade, as the US and Iran have inched closer to all-out war, as last month’s interim deal meant to permanently end the fighting has crumbled and shipping traffic in the Strait of Hormuz has largely stalled.
The United States conducted a new round of airstrikes early Monday targeting Iran after announcing the death of another American service member, and Iran fired missiles towards Jordan that risked widening the conflict into neighbouring Israel.
Meanwhile, Bahrain sounded its missile alert sirens Monday morning, warning of an Iranian retaliatory attack after US airstrikes targeted the Islamic Republic.
On the domestic equity market front, the Sensex tumbled 593.78 points, or 0.76 per cent, to 77,557.67, while the Nifty declined 169.20 points, or 0.70 per cent, to 24,165.10.
Foreign Institutional Investors offloaded equities worth Rs 376.41 crore on a net basis on Friday, according to exchange data.
The Reserve Bank data released on Friday showed India’s forex reserves jumped USD 964 million to USD 675.157 billion in the week ended July 10. In the previous reporting week, the overall kitty had jumped by USD 7.26 billion to USD 674.193 billion.
