The Indian rupee weakened by 12 paise to 96.40 against the US dollar in early trade on Monday amid rising crude oil prices and escalating tensions in the Middle East.
According to official data, the domestic currency has dropped by 1.7 per cent in the past one month alone and is inching closer to the record low of 96.96 per dollar recorded in May this year.
The rupee came under pressure amid surging crude prices, which are now trading near $90 a barrel in early trade.
The domestic currency had earlier recovered to 94 against the dollar when crude oil prices dropped to $70 a barrel earlier this month.
Improved foreign institutional inflows into the Indian market also provided much-needed, though temporary, support to the currency.
However, the gains reported in the first week of July quickly vanished after oil prices started climbing again. Brent crude advanced 2.7 per cent on Monday, breaching the $90-a-barrel mark for the first time in nearly six weeks, renewing concerns over India’s import bill and inflation outlook.
The risk of a full-scale war and a possible ground invasion of Iran by the United States is shaping up in the region as America seeks greater control over vast Iranian oil resources.
The United States military is feared to be softening Iran before launching a full-scale ground invasion – a development that could transform the region’s fate for decades.
The conflict has also disrupted shipping activity through the Strait of Hormuz, with both sides targeting maritime traffic, raising fears of further supply disruptions and keeping pressure on oil prices and the rupee.
Also read: Rupee gains 4 paise against the US dollar
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