The rupee has depreciated 20 paise to 96.17 against the US dollar in early trade on Monday amid heightened tensions in the Middle East and increased FII outflows coupled with lowered investor sentiment in the Indian stock market. The free fall in the rupee has been ongoing over the past two weeks since Iran and US talks ended in deadlock with no possibility of ending the conflict.
The rupee has come under pressure amid the rising crude oil prices and supply disruption challenges in the Strait of Hormuz.
Besides, investors have dumped billions of dollars in Indian stocks, showing reduced investor sentiment in the market since high energy, defence and AI stocks are yielding good margins.
Also, the strong dollar and high-yielding US treasury bonds have increased investor sentiment towards dollar purchases while selling stocks.
A lot will now depend on when and how the US and Iranian sides would agree to a truce and final agreement; until then the rupee will continue to remain under pressure.
Besides, prices of precious metals like gold and silver have also dropped substantially over the past few days since the central government hiked excise duties to 15 per cent on gold imports, hampering demand.
Also read: Crude oil surges past $110 a barrel
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