The rupee dipped back to near its all-time low of 77 per dollar on Tuesday after recouping slightly to 76.73 earlier in the session. The currency slumped to a record weak close of 76.93 on Monday, as crude oil prices climbed to multi-year highs driven by the Russia-Ukraine crisis.
The Press Trust of India reported the currency inched higher by 3 paise to close at a provisional 76.90 against the US dollar on Tuesday, tracking positive domestic equities and a weak dollar.
Against the the greenback, the rupee opened at a record weak 77.02 and witnessed an intra-day high of 76.71 and a low of 77.05 per dollar.
According to Bloomberg, the rupee was last trading at 76.9150 per dollar, while Reuters quoted it at 76.8975 per dollar.
The currency after opening at a record week 77.02 per dollar pared its losses and touched 76.73 earlier in the day, registering a gain of 20 paise from the previous close.
On Monday, the rupee tanked nearly 1 per cent to close at a record low of 76.93, sliding for the fourth straight session, according to a Press Trust of India (PTI) report.
During Monday's trade, the energy-sensitive currency breached 77 per dollar for the first time ever.
"The Indian rupee has plummeted to a lifetime low against the US dollar as the deepening Russia-Ukraine conflict has sapped risk appetite in the market while prompting safe-haven flows into the US dollar," Sugandha Sachdeva, Vice President for Commodity and Currency Research at Religare Broking, told PTI.
Besides, the parabolic rise in crude oil prices towards multi-year highs and spiralling commodity prices are fuelling inflationary risks, a key headwind for the rupee-dollar exchange rate, Mr Sachdev added.
Both the US crude and the global oil benchmark Brent soared to highs seen just before the 2008 financial crisis as the United States and Europe kept open the option of banning supplies from Russia, which provides about 10 per cent of world oil supply.
As Ukraine peace talks made little headway, the prospect of that ban on oil imports from Russia has triggered investor fears over inflation and slowing economic growth.
In response, $300 a barrel, "catastrophic consequences" If Russian oil is banned, according to Russian Deputy Prime Minister Alexander Novak in a statement on state television.
Oil prices see-sawed on Tuesday, torn between the Western countries' threat and counter threat from Russia.
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