The rupee slipped 3 paise to close at 71.11 against the US dollar on Monday, tracking a steady rise in crude oil prices and weakness in domestic equities. Forex traders said the drop in the rupee was largely due to a spurt in crude oil prices following rising tensions in the Middle East and North Africa.
At the interbank foreign exchange market, the local currency opened on a weak note at 71.07 and fell further to a low of 71.15.
It finally settled at 71.11, lower by 3 paise against its previous close.
The domestic unit had settled at 71.08 against the American currency on Friday.
Global crude benchmark Brent was trading 0.56 per cent higher at USD 65.21 per barrel on supply concerns after exports from Libya were blocked after a pipeline was shut down by armed forces and a strike at a key oil field in Iraq hit output.
"Indian rupee opened with minor gains but gave away all its gains amid lower domestic equities and higher crude oil prices. The strength in dollar against major trading currencies also weighed on rupee," said V K Sharma, Head PCG and Capital Markets Strategy, HDFC Securities.
Forex traders said the near term focus will remain on crude oil prices and foreign fund flows ahead of the Budget. So far this month, overseas investors have bought USD 1.71 billion in domestic equities while selling debt worth USD 1.13 billion.
"This week the focus of the market will be on the World Economic Forum. Trump's speech at the forum will be closely watched for any geopolitical maneuvers, as he has kept few trade related questions lingering," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.08 per cent to 97.68.
The 10-year Indian government bond yield was at 6.65 per cent.
"On the domestic front, no major economic data is expected to be released but market participants will be taking cues from the policy statements that will be released from Japan and Euro zone," said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Meanwhile, on the domestic market front, the 30-share BSE Sensex gave up intra-day gains to settle 416.46 points, or 0.99 per cent, lower at 41,528.91.
Likewise, the broader NSE Nifty sank 127.80 points, or 1.03 per cent, to 12,224.55.
Foreign institutional investors bought equities worth Rs 264.26 crore on a net basis on Friday, according to provisional exchange data.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.0436 and for rupee/euro at 79.1374. The reference rate for rupee/British pound was fixed at 92.9492 and for rupee/100 Japanese yen at 64.45.
Source: moneycontrol.com