Rupee plunges 50 paise to 71.32 against US dollar

The Indian rupee Monday tumbled 50 paise to close at 71.32 against the US dollar as nagging worries on global trade war front and uncertain crude prices hurt forex market sentiment. Besides, the trading pattern in the forex market was impacted by massive sell-offs in domestic equities as investors panicked over exit polls suggesting the Congress giving a tough fight to the ruling BJP in state elections.

It was a virtual collapse for the Indian unit during the session as investors hit the panic button in view of several headwinds confronting trading sentiment. The rupee opened lower at 71.28 against the US dollar and dropped further to 71.44. The Indian unit hit a high of 71.23 during the day.

However, global crude oil declined on Monday, in line with plunging global stock markets, wiping out the gains made last week when cartel OPEC and other non members agreed to slash their crude production from January.

Brent crude oil was trading at USD 61.03, a decline of 1.04 per cent. "Rupee and bond prices were under pressure also due to rising current account deficit...The 10-year government bond yield rose 13 bps at 7.59 per cent from its previous close of 7.464 per cent," an analyst said.

The Indian rupee is likely to be face extreme volatility during Tuesday's session amid crucial event of state election results, he added.

Exit polls for the recently concluded assembly elections have predicted a tight finish between the ruling BJP and the Congress in Madhya Pradesh and Chhattisgarh and a win for the opposition party in Rajasthan, impacting trading pattern on the domestic bourses in a big way.

Heightened risk associated with the current account deficit against the grim backdrop of surging global crude prices and global turmoil have all contributed to excess volatility on the trading front. Escalating global trade tensions could prompt further weakening the domestic currency along with exodus of capital from a nation also added excess volatility.

The Financial Benchmarks India private limited (FBIL) meanwhile fixed the reference rate for the rupee/dollar at 71.3257 and for the rupee/euro at 81.5738. The reference rate for rupee/British pound was fixed at 90.9108 and for rupee/100 Japanese yen at 63.43.