Rupee began the week on a negative note, falling 39 paise against the US dollar as soaring crude oil prices and escalating tensions in the Middle East dampened sentiment. The domestic currency opened at 95.72 against the greenback in the interbank foreign exchange market on Monday. The currency further weakened to 95.77, compared with Friday’s closing level of 95.38. This comes after the currency had ended the previous week 9 paise higher.Currency dealers attributed the fall to a spike in oil prices after Iran declared the Strait of Hormuz closed, fuelling concerns over a potential disruption to global crude supplies.“With Brent oil prices rising over $79 to the barrel the Indian rupee is expected to open weaker at 95.53 levels after Iran declared the Strait of Hormuz as closed,” forex traders said.“The renewed fighting between the US and Iran revived fears of a major disruption to global Crude supplies,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.Brent crude, the global benchmark, surged 4.05% to $79.09 per barrel in futures trade, while the US dollar also strengthened. The dollar index, which tracks the greenback against a basket of six major currencies, was up 0.17% at 101.12.“Brent oil prices rose by more than 4% this Monday morning rising to $79.25 per barrel as Iran announced the closure of Strait of Hormuz. The latest rally came after Iran on Sunday expanded missile and drone attacks to Gulf states and the UAE in retaliation for US strikes,” Bhansali added.The weakness in rupee mirrored the broader risk-off mood at the Dalal Street. Benchmark equity indices opened deep in the red, with the Sensex falling 616.15 points to 76,946.97 and the Nifty dropping 190.50 points to 24,015.However, foreign investors continued to support Indian equities. According to exchange data, foreign institutional investors (FIIs) bought shares worth a net Rs 2,603.72 crore on Friday.Meanwhile, the Reserve Bank of India provided some positive macroeconomic news, reporting that the country’s foreign exchange reserves increased by $7.26 billion to $674.193 billion in the week ended July 3. In the previous reporting week, the reserves had declined by $5.654 billion to $666.933 billion.
