The rupee slipped 35 paise to a record low of 95.58 against the US dollar in early trade on Tuesday amid persistent tensions between Iran and the United States following the collapse of peace talks. The decline also triggered weakness in the Indian equity markets, which traded lower in the opening session.
The latest drop follows a massive single-day fall yesterday when the currency closed at a then-record low of 95.31 per dollar, putting further pressure on the rupee.
The fall in the currency is largely attributed to fluctuating crude oil prices, which have climbed to $105 per barrel as fears of fresh escalations remain high.
The rupee has also come under pressure due to a strong US dollar and high-yielding US treasury bonds, forcing investors towards dollar hoarding, while Foreign Institutional Investors (FIIs) continue to pull funds out of the Indian markets.
Countries like India, which depend heavily on the import of crude oil flowing through the Strait of Hormuz, are facing additional pressure on the rupee. Over 85 per cent of the country’s crude is imported from international markets.
The trend is expected to continue in the next few days, since US President Donald Trump is weighing the option of resuming military action against Iran after it rejected demands to give away its enriched uranium, which remains a major sticking point in the peace talks.
Earlier, US Secretary of State Marco Rubio said that “the United States cannot allow Iran to have nuclear weapons" while laying claim to the Strait of Hormuz.
He added that a nuclear Iran would be out of control if they decided to block or start collecting a toll in the Strait of Hormuz.
Also read: Rupee crashes 82 paise, ends at new low of 95.31
Follow us
