India’s Rupee briefly tumbled to a 4 month low tracking the action in the local equity market, which saw NIFTY 50 crashing. At the interbank market, the value of Rupee depreciated at one point by 40 paise, but before the Monday close it managed to recover and was seen settling down -0.11% at 71.85 against the US dollar.
The heightened tensions in the Middle East between the US and Iran has led to a surge in safe haven bids, triggering a sell off in the emerging market currencies. The price of the precious metal Gold surged to levels not seen in 7 years while the price of Crude Oil jumped to $64.69, levels not seen since April 2019. The USA and Iran are some of the biggest oil producing countries in the world.
India’s domestic currency INR, will be directly impacted by the rise in oil and gold prices as India is both a major oil importer and the world’s largest importer of gold.
At the same time, the dollar index, which gauges the greenback’s strength against a basket of major currencies, settled lower on Monday at 96.62 failing to act as a safe haven asset.
During the early Asia trading hours, the USD/INR exchange rate was seen quoted within a range of 71.87 – 71.68.
Elsewhere, foreign institutional investors (FIIS) were net sellers of shares in the local equity market worth Rs -103.84 crore; according to the National Stock Exchange of India data published at the end of Monday’s trading session. At the same time, Domestic institutional investors were net sellers, dumping equities worth Rs -23.7 crore.
The domestic benchmark equity index NIFTY 50 experienced the biggest one-day fall in 6 months and crashed to level not seen since the beginning of December amid rising geopolitical tensions. By the end of Monday’s close the index settled down -1.91 at 11,993. During early Asia trading hours NIFTY 50 was seen quoted slightly higher around the 12,020 level.
The Indian 10-year government bond yield was seen quoted at 6.56% in morning trade compared with its previous close of 6.57%.
