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    Rupee drops 29 paise, ends 5-day winning run as crude oil spikes nearly 4%

    Rupee drops 29 paise, ends 5-day winning run as crude oil spikes nearly 4%

    Rupee drops 29 paise, ends 5-day winning run as crude oil spikes nearly 4%
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    By PTI  IST (Updated)

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    At the interbank foreign exchange, the rupee opened at 74.71 against the American dollar but later dropped to a low of 74.99 against the greenback. The local unit was quoted at 74.84 at close, down 29 paise from the previous close.

    The rupee depreciated by 29 paise to close at 74.84 against the US currency on Tuesday, ending its five-day winning run as crude oil spiked nearly 4 percent and equities dived after Russia recognised two separatist regions in eastern Ukraine and decided to send soldiers. Forex traders said sustained foreign fund outflows, a lacklustre trend in domestic equities and elevated crude oil prices weighed on investor sentiment.
    At the interbank foreign exchange, the rupee opened at 74.71 against the American dollar but later dropped to a low of 74.99 against the greenback. The local unit was quoted at 74.84 at close, down 29 paise from the previous close.
    Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.04 percent lower at 96.03.
    Russian President Vladimir Putin has recognised the independence of separatist regions in eastern Ukraine - a move that will severely ratchet up tensions with the West amid fears that his country could invade Ukraine at any moment and use skirmishes as a pretext for an attack. World leaders condemned the Russian President and prepared on Tuesday to hit his administration with sanctions, fueling fears of disruption to oil and gas supplies.
    "The rupee has glided lower by around 0.50 percent amid mounting tensions between Russia and Ukraine, which has hurt the risk sentiments in the markets and led to significant outflows," said Sugandha Sachdeva, Vice President - Commodity and Currency Research, Religare Broking Ltd. Besides, crude prices have soared to seven-year highs due to lingering supply worries, which is dragging down the Indian rupee, Sachdeva added.
    Global oil benchmark Brent crude futures jumped 3.56 percent to USD 98.79 per barrel.
    "As of now, the dollar looks to remain well bid, owing to its safe-haven appeal in a backdrop of heightened geopolitical risks. This shall keep the Indian rupee under pressure in the near-term. We envisage near-term support at the 75 mark for the domestic unit, a breach of which shall lead to further depreciation for the rupee-dollar exchange rate," Sachdeva said.
    "Rupee slumped as crude oil rose amid worsening tensions between Ukraine and Russia. The risk-off sentiments and RBI's sell/buy swap announcements also weighed on rupee," said Dilip Parmar, Research Analyst, HDFC Securities. Parmar further added that sentiments are expected to remain shaky on uncertainty over geopolitical worries. "Looking ahead, simmering geopolitical risks and the Federal Reserve meeting will remain in the centre stage," Parmar said.
    According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the rupee weakened against the dollar, posting its biggest decline in nearly two weeks, as the Russia-Ukraine standoff escalated, and oil prices spiked. "The rupee tracked other Asian currencies and broad dollar strength as well as a decline in equities across the region amid risk aversion," Iyer said.
    On the domestic equity market front, the 30-share Sensex ended 382.91 points or 0.66 percent lower at 57,300.68, while the broader NSE Nifty settled down 114.45 points or 0.67 percent at 17,092.20.
    Foreign institutional investors remained net sellers in the capital market on Monday as they offloaded shares worth Rs 2,261.90 crore, as per stock exchange data.
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