The rupee plunged 43 paise to close at 88.26 against the US dollar on Monday as broad strength in crude oil prices and month-end dollar demand from importers weighed on investor sentiment.
Forex traders said the rally in crude oil prices was driven by a potential US-China trade deal, which supports expectations for a stronger global oil demand. At the interbank foreign exchange, the rupee opened at 87.87 against the greenback and fell to an intra-day low of 88.31 and a high of 87.86. It finally closed the day at 88.26 against the greenback, down 43 paise from its previous close.
On Friday, the rupee had appreciated 5 paise to close at 87.83 against the US dollar. Traders continue to watch developments around trade negotiations and geopolitical events for further cues.
Analysts expect the rupee to trade with a positive bias on improved domestic market sentiments amid optimism over the trade deal and strong domestic equities. Easing geopolitical tensions may also support the rupee. However, month-end dollar demand from importers and a surge in global crude oil prices may cap sharp upside. USD-INR spot price is expected to trade in a range of 87.80 to 88.50.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.08 per cent lower at 98.86. Brent crude, the global oil benchmark, was trading 0.85 per cent lower at USD 65.39 per barrel in futures trading.
Meanwhile, India's forex reserves increased by USD 4.496 billion to USD 702.28 billion during the week ended October 17 as the value of gold reserves rose further, the RBI said on Friday. In the previous week, the overall reserves had jumped by USD 2.176 billion to USD 697.784 billion.
Also read: Rupee hits low of 88.80 against US dollar
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