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Rupee falls sharply as US likely to announce Iran oil buyers have to end imports

Representation image (Source: Reuters)

The rupee fell sharply by 47 paise to 69.82 against the US dollar in early trade Monday as a result of a rise in crude oil prices.

Oil prices shot up after Washington Post foreign policy and national security columnist Josh Rogin wrote that the United States is preparing to announce on Monday that all buyers of Iranian oil will have to end their imports shortly, or be subject to US sanctions.

Brent crude futures, the global oil benchmark, was trading higher by 2.53 per cent at USD 73.79 per barrel. Removing the sanctions exemptions would reduce oil supply from a market that is already tight because of US sanctions against Iran and fellow OPEC-member Venezuela.

The US reimposed sanctions in November on exports of Iranian oil after President Donald Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers. Washington, however, granted Iran's eight main buyers of oil, mostly in Asia, waivers to the sanctions which allowed them limited purchases for half-a-year.

India is among the nations that imports oil from Iran after getting a waiver from US-imposed sanctions.

The rupee Thursday had gained 25 paise to 69.35 against the US dollar after three sessions of losses. The currency market was shut on Friday on account of Good Friday.

Forex dealers told PTI that apart from increased demand of the US currency from importers, the lower opening of the equity markets weighed on the rupee.

The domestic unit opened lower at 69.78 against the dollar then dropped further to quote at 69.82, down 47 paise over its previous close.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.02 per cent to 97.39.

The BSE benchmark index was trading 309.56 points or 0.79 per cent lower at 38,830.72. The NSE Nifty too cracked to 101.80 points, or 0.87 per cent, to 11,651 in early session. Oil importing firms like Bharat Petroleum and Indian Oil Corporation were worst hit.