New Delhi: The rupee depreciated 27 paise to close at 95.65 (provisional) against the US dollar on Monday, weighed down by elevated crude oil prices after Iran declared the Strait of Hormuz closed.
Forex traders said renewed drone and missile strikes between the US and Iran prompted supply concerns, while elevated crude oil prices and a strong greenback triggered capital outflows.
At the interbank foreign exchange market, the rupee opened at 95.72 against the American currency and traded in a range of 95.58-95.86 during the session.
Follow The PSUWatch Channel on WhatsApp
The rupee finally closed at 95.65 (provisional), down 27 paise from its previous close.
On Friday, the rupee rose 9 paise to settle at 95.38 against the US dollar.
"The Indian rupee opened lower as the US-Iran war intensified over the weekend. A surge in crude oil prices and a rise in the US dollar too pressurised the rupee. However, the rupee recovered from lower levels on recovery in the domestic markets and some softening of crude oil prices from the day's highs," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.
Choudhary further said, "We expect the rupee to trade with a negative bias on risk aversion in global markets amid heightened tensions between the US and Iran. However, diplomatic efforts to de-escalate tensions may support the rupee at lower levels."
USD-INR spot price is expected to trade in a range of 95.40 to 96, Choudhary said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 100.91, down 0.03 percent.
Brent crude, the global oil benchmark, was trading higher by 1.93 percent at USD 77.48 per barrel in futures trade.
On the domestic equity market front, Sensex ended marginally higher by 47.01 points at 77,616.40, while the Nifty was up 4.10 points to 24,211.
Foreign institutional investors purchased equities worth Rs 2,603.72 crore on a net basis on Friday, according to exchange data.
Follow PSU Watch on LinkedIN
On the domestic macroeconomic front, the Reserve Bank of India on Friday said the country's forex reserves jumped USD 7.26 billion to USD 674.193 billion during the week ended July 3.
In the previous reporting week, the forex kitty had dropped by USD 5.654 billion to USD 666.933 billion.
Meanwhile, Commerce and Industry Minister Piyush Goyal on Monday said India and the US teams are fully engaged for a trade pact that is balanced, commercially meaningful, and delivers tangible benefits for businesses, farmers, workers, and consumers.
(PSU Watch is India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy. 👉 Click to join our channel now: PSUWatch WhatsApp Channel. Prefer LinkedIn? Follow PSU Watch on LinkedIN. Click to stay connected on Twitter here and stay updated)