MUMBAI - The Indian rupee dropped to its lowest level in three months on Monday, in line with other Asian currencies, as the rapid spread of the Delta variant of coronavirus threatened to derail economic recovery.
The partially-convertible rupee ended at 74.87/88 per dollar, compared with its close of 74.56 on Friday. The currency fell 0.4% on the day, its biggest single-day fall since June 17.
"The bias of risk appetite is gradually turning towards risk-off as markets evaluate the impact of a resurgence in COVID-19 cases worldwide against a backdrop of escalating inflation environment and emergence of U.S.-China tensions," said Upasna Bharadwaj, economist at Kotak Mahindra Bank.
Stock markets and currencies in Asia saw heavy losses as some countries in the region tightened curbs to tackle a highly contagious Delta variant-fuelled surge of infections that sparked a sell-off in risky assets.
India reported 38,164 new infections in the last 24 hours, data from health ministry showed, with deaths rising by 499 — the lowest in more than three months. The country's broader NSE share index and the main BSE share index both dropped 1.1% each.
The dollar gained broadly as investors expressed renewed scepticism over the potential for a strong economic rebound from the pandemic.
Looking ahead, traders now broadly expect the rupee to trade in a range of 74.40-75.40 over the week.
(Reporting by Swati Bhat; editing by Uttaresh.V) ((firstname.lastname@example.org; twitter.com/swatibhat22; +91-22-68414381; Reuters Messaging: email@example.com))