The rupee fell sharply by 47 paise to close at 85.87 against the US dollar on Monday amid soaring global crude prices and a stronger greenback. Forex traders cited heavy dollar demand from oil importers and uncertainty over a US-India trade deal. Meanwhile, foreign investors sold equities worth Rs 760 crore.
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The rupee fell sharply by 47 paise to close at 85.87 (provisional) against the US dollar on Monday amid rising global crude oil prices and a strong American currency.
Outflow of foreign funds fuelled by uncertainties over US President Donald Trump's trade tariffs put further pressure on the local unit, according to forex traders.
At the interbank foreign exchange, the rupee opened at 85.53 against the US dollar and traded in the range of 85.51-86.03 before settling at 85.87 (provisional), lower by 47 paise from its previous close.
The rupee had settled at 85.40 against the US dollar on Friday.
The rupee fell on constant buying by oil companies and importers as Saudi Arabia raised oil prices for Asian deliveries despite increase in output for the month of August and expectations for an increase of the output in September, Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
"Trump's (tariff) deadline of July 9 was approaching and there has been no sign of India-US trade deal happening... the rupee has fallen as the market is not expecting the deal to be done soon and the US could impose additional duties on India exports," he said.
Meanwhile, US President Donald Trump has also threatened to impose an additional 10 per cent tariff on countries aligning themselves with the "anti-American" policies of the BRICS grouping. Leaders of the BRICS are meeting in Brazil for the 17th BRICS Summit on July 6-7.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.24 per cent to 97.41.
Brent crude, the global oil benchmark, was up 0.26 per cent to USD 68.48 per barrel in futures trade.
Meanwhile, in the domestic equity market, the Sensex inched up 9.61 points to settle at 83,442.50, while Nifty closed almost unchanged at 25,461.30.
India's forex reserves were up USD 4.84 billion to USD 702.78 billion for the week ended June 27, the Reserve Bank of India said on Friday.
Foreign institutional investors (FIIs) offloaded equities worth Rs 760.11 crore on a net basis on Friday, according to exchange data.
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