Following the temporary recovery it witnessed on Monday, the Indian Rupee fell again as geopolitical tensions in West Asia got back on track. The domestic currency started at 18 paise down at 86.77 per US dollar, as against its last closing of 86.59 on Friday, as per quotations. The rupee is down 1.34 per cent so far this month, and analysts are looking forward to it falling further in the next few days.
The fresh trading turbulence in currencies is due to the intensive military attack over the weekend by the United States that focused and destroyed three nuclear facilities in the Iranian nation. President Donald Trump of the US termed the operations as thoroughly destroyed and sternly fixed that more forceful attacks were to be expected unless Iran is willing to seek peace with Israel. The events have rattled the world markets, and investors are rushing to the conventional safe-haven investments like the US dollar and gold.
As a part of the counter reaction to the strikes, it is reported that the Iranian Parliament has voted to shut down the Strait of Hormuz, whose narrowness means that practically one-fifth of the world’s petroleum supply is sent through this narrow passage. Such a step will most probably increase pressure on the world oil markets and increase fears of supply interruptions.
Prices of crude oil rose to as high as 5.7 per cent during the early hours of the trading day, then scaled back. At 9.05 AM IST, Brent crude has jumped 1.70 per cent to trade at 78.32 a barrel, whereas WTI crude has surged by 1.71 per cent to 75.10 dollars. This decline in the rupee will lead to a further depreciation of the currency since it has also already lost 1.29 per cent in the current financial year.
In the meantime, the US Dollar Index, which measures the greenback against a basket of six major currencies, rose by 0.33% to 99.03 on the rush into safe-haven currencies on increasing geopolitical tensions.
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