Mumbai: The rupee Monday fell sharply by 59 paise to close at nearly two-and-a-half-month-low of 70.51 against the US currency due to persistent foreign fund outflows and renewed worries over rising crude oil prices.
An unabated sell-off in domestic equity markets also weighed on the domestic currency, forex dealers said.
The rupee opened sharply lower at 70.16 and fell further to touch over two-month low of 70.53 at the interbank foreign exchange market as oil prices rose over 1 per cent in global markets.
The local unit finally settled at 70.51, down by 59 paise over its previous close. The rupee had on Friday closed at 69.92 against the US dollar.
"Indian rupee plunges along with other emerging market currencies amid concerns of a drawn-out trade war.
"Sovereign bonds edged higher due to a contraction in factory output and expectations of inflation staying below the target. This could force RBI to look for the Interest rate cut options in upcoming policy meet. Rise of more than 1.5 per cent in crude prices and heavy selling in domestic equity markets also weighed on rupee during today's trade," said VK Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.
Brent crude futures, the global oil benchmark, rose 1.57 per cent to USD 71.73 per barrel due to simmering tensions in the Middle East.
Saudi Arabia said Monday that its two oil tankers were among the commercial vessels that were damaged in "sabotage" attacks in the Gulf. The UAE on Sunday said that four commercial vessels were attacked near bunkering hub Fujairah.
Domestic investors kept weighing weak cues from global markets amid uncertainties around US-China trade tariff deal. Also, sustained foreign fund outflows kept investors edgy.
Foreign investors remained net sellers in the capital markets, offloading shares worth Rs 1,056.01 crore Monday, provisional exchange data showed.
Stock markets fell for a ninth session in a row due to a sustained sell-off with the BSE Sensex crashing over 372 points and the NSE Nifty diving nearly 130 points.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.04 per cent lower at 97.28.
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Many emerging currencies weakened in the day despite positive news flow of US-China trade talks and US jobs reports allaying global growth fears. This suggests market participants have already priced in these news snippets and look to book profits in riskier assets, which are likely more sensitive to any downside," said Rajesh Cheruvu, Chief Investment Officer, WGC Wealth.
Meanwhile, Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 69.9212 and for rupee/euro at 78.4884. The reference rate for rupee/British pound was fixed at 90.9269 and for rupee/100 Japanese yen at 63.72.
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