Indian rupee plunges against UAE dirham as dollar demand grows amid Russia-Ukraine tension

The Indian rupee declined 20 paise to 75.56 against the US dollar (20.58 versus the UAE dirham) in opening trade on Monday, amid geopolitical tensions pushing investors to the safe-haven appeal of the greenback.

Forex traders said muted Indian equities and elevated crude oil prices weighed on the rupee.

At the Indian interbank foreign exchange, the rupee opened at 75.53 against the US dollar, then slipped further to 75.56, registering a decline of 20 paise from the last close.

On Friday, the rupee had plunged by 21 paise to a nearly seven-week low of 75.36 against the US currency on forex outflows and a strong dollar after a spike in inflation in the US boosted expectations of an aggressive rate hike by the Federal Reserve.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.03 per cent to 96.05. Meanwhile, global oil benchmark Brent crude futures rose by 1.09 per cent to $95.47 per barrel.

"The US and Britain advised their nationals to leave Ukraine as Russia has massed enough troops near Ukraine to launch a major invasion. This could push investors to the safe haven appeal of the greenback," said Sriram Iyer, senior research analyst at Reliance Securities.

Additionally, crude oil prices moved higher, while all the Asian and emerging market peers have started weaker this Monday and could weigh on sentiments, Iyer said, adding that "the Reserve Bank of India could be present to curb volatility".

On the Indian equity market front, the 30-share Sensex was trading 1,117.08 points or 1.92 per cent lower at 57,035.84 points, while the broader NSE Nifty declined 339.95 points, or 1.96 per cent, to 17,034.80 points.

(with inputs from PTI)