The rupee fell by 34 pounds after the price of crude oil rose to more than 110 dollars per barrel

The rupee fell by 34 pounds to close at 76.18 against the US dollar on Monday as higher crude oil prices and a lackluster trend in local stocks weighed on investor sentiment.

Expectations of a strong interest rate hike by the US Federal Reserve to control inflation also affected the local unit.



In the interbank foreign exchange market, the rupee opened lower at 76.08 against the US currency, and later lost more ground to settle at 76.18, down 34 pounds from the previous close.

On Thursday, the rupee jumped by 37 pounds to close at 75.84 against the US dollar. The forex market is closed on friday on holly account.

“The dollar is in a bullish position as markets anticipate a more hawkish Fed move forward. Weak local equities and higher crude oil prices have also weighed on the domestic unit,” said Dilip Parmar, Research Analyst, HDFC Securities.

Crude oil prices jumped 3.47 percent to $111.68 per barrel after reports that European countries would also consider a US-style embargo on Russian oil.

Saudi Arabia said on Monday that it will not bear any responsibility for any shortage of oil supplies to global markets after attacks by the Iranian-backed Yemeni Houthi movement affected the kingdom’s production.

On Sunday, Yemeni rebels launched a series of attacks targeting the kingdom’s oil and natural gas production.

Parmar also said that there are quite a few economic events this week and the focus will remain on peace talks between Ukraine and Russia, which will heighten risk sentiment and crude oil prices. “The USD/INR is facing strong support at 75.70 and resistance at 76.45,” Parmar noted.

“The Indian rupee depreciated against the US dollar as oil prices rose on Monday as the conflict in Ukraine worsened and concerns grew about the risks of disruptions to energy supplies,” said Sriram Iyer, senior research analyst at Reliance Securities.

Moreover, attacks on Saudi energy facilities by Houthi rebels in Yemen have reinforced concerns about global oil supplies, Ayer said.

Weakness among most Asian currencies, ahead of Federal Reserve Chairman Jerome Powell’s speech, kept investors on edge.

According to Jateen Trivedi, Senior Research Analyst at LKP Securities, the rise in the price of Brent crude towards $110 per barrel has pushed the rupee below the 76 level.

Meanwhile, the price of diesel sold to wholesale users rose by about Rs 25 per liter in line with the nearly 40 per cent rise in global oil prices.

Trivedi said an increase in the government’s wholesale purchase of diesel oil could lead to higher inflation, adding that the rupee can be seen in the range of 76.50-75.75.

The US dollar bounced back from recent declines after Federal Reserve officials said the central bank may need to be more aggressive in dealing with inflation.

The dollar index, which measures the dollar’s strength against a basket of six currencies, was trading down 0.03 percent at 98.20.

In terms of the local stock market, the 30-share Sensex index closed down 571.44 points, or 0.99 percent, at 57,292.49, while the broader NSE Nifty index fell 169.45 points, or 0.98 percent, to 17,117.60.

Foreign institutional investors remained net buyers in the capital market on Thursday, buying shares worth Rs 2,800.14 crore, according to stock exchange data.

(The title and image for this report may have been reformulated only by the Business Standard staff; the rest of the content is automatically generated from a shared feed.)

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