New Delhi: The rupee opened on a weak note and slumped to an all-time low of 96.25 in early trade on Monday, as elevated crude oil prices, global uncertainty, and a stronger dollar continue to remain key risks for the domestic unit.
Forex traders said higher crude oil prices, a stronger US dollar, and ongoing geopolitical tensions have together created a difficult environment for emerging market currencies, and the rupee is now clearly reflecting that stress.
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At the interbank foreign exchange market, the rupee opened at 96.19, then fell further to 96.25 against the US dollar, registering a fall of 44 paise from its previous close.
On Friday, the Indian rupee crashed below the 96/USD mark on Friday before closing at an all-time low of 95.81 against the US dollar.
"For now, elevated crude oil prices, global uncertainty, and a stronger dollar continue to remain key risks for the rupee. However, the encouraging sign for markets is that both the government and the RBI have already started taking proactive measures to manage the situation before it becomes more uncomfortable," CR Forex Advisors MD Amit Pabari said.
Meanwhile, within days of levying high customs duties on precious metals, the government on Saturday imposed import curbs on silver by putting the metal under a licensed regime for inbound shipments.
The government, on May 13, hiked import duty on precious metals - gold, and silver - from 6 per cent to 15 per cent. The effective duty (including 3 per cent IGST) is over 18 per cent.
It was hiked to control the outflow of forex by curbing non-essential imports. "Only stoppage of war and reopening of the Strait of Hormuz can bring about a lower demand on the $/rupee pair, else 100 seems to be on the card if RBI does not announce any schemes to increase dollar inflow into the country," Bhansali added.
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On the domestic equity market front, Sensex tanked 833.20 points to 74,404.79 in early trade, while the Nifty was down 234 points to 23,401.70.
Foreign Institutional Investors remained net buyers for the second straight session, purchasing equities worth Rs 1,329.17 crore on Friday, according to exchange data.
Meanwhile, India's forex reserves jumped by USD 6.295 billion to USD 696.988 billion during the week ended May 8, the Reserve Bank said on Friday. The overall reserves had dropped by USD 7.794 billion to USD 690.693 billion in the previous reporting week.
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