Currency Update: Rupee tumbles by 31 paise to close at all-time low of 84.03 against US dollar

The rupee slumped 31 paise to settle at an all-time low of 84.03 (provisional) against the US dollar on Monday, following a sell-off in broader global markets amid rising geopolitical tensions in the Middle East and worries over recession in the US.

Forex traders said the downfall in the domestic unit came on the heels of a sharp downturn in the Indian equity markets and significant foreign fund outflows.

At the interbank foreign exchange market, the local unit opened at 83.78 and touched an intra-day high of 83.76 and a low of 84.03 against the dollar during the session.

It finally settled at its fresh record low level of 84.03 (provisional) against the American currency, down 31 paise against its previous close.

On Friday, the rupee settled 1 paisa higher at 83.72 against the US dollar in a range-bound trade.

"We expect the rupee to trade with a negative bias on risk aversion in the global markets. Escalation of geopolitical tensions in the Middle East and outflows by foreign investors may further pressurise the domestic unit," said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

However, a weak US dollar and declining crude oil prices may support the rupee at lower levels. Any intervention by the Reserve Bank may also benefit the rupee, Choudhary added.

Traders may take cues from US ISM services PMI data. Investors may watch out for the RBI's monetary policy decision this week. USD/INR spot price is likely to trade in a range of Rs 83.60 to Rs 84.20, Choudhary said.

In the domestic equity market, the 30-share BSE Sensex tanked 2,222.55 points, or 2.74 per cent, to settle at 78,759.40 points, and Nifty dropped 662.10 points, or 2.68 per cent, to 24,055.60 points.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, dropped 0.65 per cent to 102.54.

Brent crude futures, the global oil benchmark, fell 1.91 per cent to USD 75.34 per barrel.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday as they offloaded shares worth Rs 3,310.00 crore, according to exchange data.