Rupee dives to 6-week low as crude spikes above USD 75 per barrel

Mumbai: The rupee on Thursday slumped 39 paise to close at more than six-week low of 70.25 against the US dollar due to rising crude oil prices and a late sell-off in domestic equity markets.

Besides, a strengthening dollar against some major currencies overseas also weighed on the home unit, forex dealers said. At the Interbank Foreign Exchange, the rupee opened sharply lower at 70.06 and fell further to the day's low of 70.27 as crude oil prices breached the USD 75 per barrel mark for the first time this year.

The domestic currency finally settled down by 39 paise or 0.56 per cent at 70.25 per dollar, the lowest closing level since March 6. The rupee on Wednesday had declined 24 paise to close at 69.86.

Global benchmark Brent breached the USD 75 per barrel level for the first time in 2019 following stricter US sanctions on Iran oil. Saudi Arabia's comments that it sees no immediate need for intervention in the oil market also fuelled the rally even as the US data showed larger-than-expected increase in oil stockpiles.

"Rising crude and Dollar Index weighed on the rupee. Besides stronger crude oil prices, weakness in Asian currencies weighed on rupee," V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities, said. A 10 per cent spike in crude prices can result in a 0.40 per cent widening of the CAD, which could result into a 3-4 per cent depreciation in the rupee and also push up inflation by 0.24 per cent, Sharma pointed out.

The BSE Sensex closed at 38,730.86, down by 323.82 points, or 0.83 per cent and the NSE Nifty dropped 84.35 points to settle at 11,641.80. The Dollar Index, which gauges the greenback's strength against a basket of six currencies, was up by 0.08 per cent to 98.25.

Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 69.9418 and for rupee/euro at 78.0527. The reference rate for rupee/British pound was fixed at 90.2590 and for rupee/100 Japanese yen at 62.49.