The rupee shed 56 paise on Monday, closing provisionally at 95.74 against the US dollar. The downward move completely wiped out the currency's gains from the previous session due to widespread global risk aversion.
The sentiment was severely dented by a sharp surge in international crude oil prices alongside a stronger US dollar index. Flaring tensions in West Asia forced investors to abandon riskier assets in favour of the safe-haven greenback.
At the interbank foreign exchange market, the rupee opened at 95.35, then touched an intraday high of 95.15 and finally ended the session at 95.74 (provisional), registering a loss of 56 paise from its previous close.
On Friday, the rupee appreciated 56 paise to close at 95.18 against the US dollar, after the Reserve Bank announced measures to support foreign capital inflows and strengthen forex liquidity.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 100.16, up 0.09 per cent.
Brent crude, the global oil benchmark, was trading higher by 3.94 per cent at USD 96.76 per barrel in futures trade after Iran launched multiple rounds of missiles toward Israel.
Also read: Sensex tanks 719 points amid rising oil prices, weak global cues
"We expect the rupee to trade with a negative bias on escalating geopolitical tensions between the US, Israel, and Iran and rising crude oil prices. A strong dollar and rise in US treasury yields may also pressurise the rupee," said Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan.
Choudhary further noted that any intervention by the Reserve Bank may support the rupee at lower levels. The USD-INR spot price is expected to trade in a range of 95.40 to 96.10.
On the domestic equity market front, Sensex tanked 719.08 points to settle at 73,524.26, while the Nifty dived 243.70 points to 23,123.
Foreign institutional investors offloaded equities worth Rs 8,776.25 crore on a net basis on Friday, according to exchange data.
India's forex reserve jumped by USD 938 million to USD 682.321 billion during the week ended May 28, the Reserve Bank said on Friday. In the previous reporting week, the kitty dropped USD 7.511 billion to USD 681.384 billion.
Meanwhile, US President Donald Trump has asked Israeli Prime Minister Benjamin Netanyahu not to retaliate to Iran's latest barrage of missiles, saying it would jeopardise the ongoing negotiations for a peace deal to end the three-month-long conflict.
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