By Christina Titus
The Indian rupee depreciated 18 paise to settle at 86.24 to a dollar on Tuesday as the West Asia conflict escalated further during the day. The escalation lifted the crude oil prices by nearly 2% to $74.6 per barrel during the day.
The Iran-Israel conflict continued for the fifth day, and Donald Trump called for an evacuation in Tehran. Earlier in the day, Trump left the Group of Seven leaders meeting in Canada halfway, saying to put a permanent end to the war. Israeli Strategic Affairs Minister Ron Dermer said in an interview on Bloomberg Television that Israel will continue its operations against Iran regardless of any negotiations with the US.
“The domestic currency rose to 85.90 based on the expectation of Israel-Iran conflict not escalating further and comforting comments from the RBI governor on possible easing if data is supportive. However, when oil prices started going up again, the rupee surrendered most of its gain and closed lower at 86.24,” said Gopal Tripathi, head of treasury, Jana Small Finance Bank.
The FII outflows from the equity market also weighed on the domestic currency. The stop loss has been triggered at 86.10 today, said a dealer with a private bank. Market participants expect outflows to be on the higher side this week on account of escalating geopolitical tensions.
“Going forward, the rupee will be more guided by the global factors. Despite pressure due to a weakening dollar, support will be available to the domestic currency,” said Tripathi. The dollar index was up marginally to 98.15 on Tuesday.
Forex dealers expect the rupee to trade in the range of 85.85-86.50 during the week. Market participants will keenly watch out Federal Open Market Committee, even though rates are expected to remain unchanged.