Rupee Weakens To One-Month Low On Iraq Crisis, May Breach 60-Mark Again

MUMBAI: The rupee opened at a one-month low of 59.81 against the dollar in the interbank forex market — 5 paise lower than its previous close — as international crude oil prices continued to rise on the back of the crisis in Iraq.

Within 20 minutes of opening, the domestic currency weakened to 59.97 with dealers forecasting that it could hit the 60 level on Monday.

The rupee has weakened by over one per cent in the last two trading sessions after a civil war broke out in Iraq.

The currency appears to be gaining some support from steady equity markets which opened flat. According to brokers, Prime Minister Narendra Modi's statement that the government will have to take tough decisions on the economy and the finance minister's commitment to fiscal discipline is being seen as a positive by the markets.

Forex dealers said that the "risk off" situation created because the crisis in Iraq had led to unwinding of position built up by arbitrageurs who were buying rupee in the domestic market and selling in the NDF market.

Arbitrageurs squared their positions by selling rupees locally and buying overseas which added to the pressure.