Mumbai: Snapping its four-day rising streak, the rupee Monday dropped by 88 paise, its biggest single-day loss in more than three months, to close at 70.46 against the US currency as oil prices rebounded and the US currency gained strength.
Forex dealers said increased dollar demand from importers amid firming global crude oil prices and a strong dollar weighed on the rupee sentiment.
Crude prices rebounded on Monday after Russian President Vladimir Putin and Saudi Arabia's Crown Prince Mohammed bin Salman agreed to extend their agreement to limit production to arrest a slump in global prices.
Crude oil prices surged over 3.85 percent to USD 61.75 per barrel in global markets.
The rupee opened lower at 69.87 and fell further to settle lower by 88 paise or 1.26 percent, its biggest single-day loss in since August 13, at 70.46 per US dollar. The rupee had strengthened by 27 paise to close at a four-month high of 69.58 against the US currency Friday.
Forex dealers said the American currency gained strength after the US and China agreed to put off imposition of higher tariffs from January 1 while entering a 90-day period of talks to bring an end to the dispute.
"The rupee has declined on account of sharp rebound in the crude oil prices in the international market. Further India's GDP and fiscal deficit data disappointed the market. Hence the rupee is under pressure," said Rushabh Maru - Research Analyst, Anand Rathi Shares and Stock Brokers.
India's economic growth slowed to 7.1 percent in the September quarter as consumption demand moderated and farm sector displayed signs of weakness.
According to data released by the Controller General of Accounts the full-year fiscal deficit target of Rs 6.24 lakh crore was breached at October-end mainly on account of lower revenue collections.
Maru further said that "focus will now shift to the RBI and OPEC meetings. The RBI is likely to keep interest rate unchanged in the policy meeting. But its guidance will be important."
Foreign funds invested Rs 293.12 crore on a net basis in the capital markets, provisional data showed Monday.
Equity benchmarks continued their rising streak for the sixth straight session Monday. The 30-share gauge ended with a marginal gain of 47 points at 36,241. Similarly, the broader NSE Nifty edged up by 7 points to 10,883.75.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.0280 and for rupee/euro at 79.5887. The reference rate for rupee/British pound was fixed at 89.5005 and for rupee/100 Japanese yen at 61.69.