The Indian rupee fell to hit a two-month low against US dollar on Monday after oil prices surged following a spike in tensions between the US and Iran.

In early deals today, the rupee traded at 72.04 a dollar, down 0.3% from Friday's close of 71.81. The Indian unit had opened at 71.99 and so far today has touched a low of 72.05 a dollar -- a level last seen on 14 November.

A surge in Brent crude prices will hit India's current account deficit. On Monday, Brent crude advanced 2.7% to hit $70 a barrel first time in nine month. Prices have gained nearly 7% so far this year.

President Donald Trump has warned Iran of major retaliation and threatened heavy sanctions on Iraq if American troops are forced to leave unless the country repays billions in military base construction cost

Back home, the yield on the 10-year government bond was at 6.535% compared with its previous close of 6.515%. Bond yield and prices moves in opposite directions.

Year to date, the rupee has weakened 1%, while foreign investors have bought nearly $202.90 million in Indian equities and sold $189.30 million in debt.

In pre-opening trade, the benchmark Sensex index was down 0.1% or 56.97 points at 41407.64 points. Since April, the index has gained 0.5%.

Other Asian currencies also traded lower. Indonesian rupiah and The Philippines peso were down 0.2% each, while South Korean won fell 0.19%. The Malaysian ringgit was down 0.16%, Taiwan dollar 0.1%, China renminbi 0.07%, Singapore dollar 0.07%. However, Thai Baht and Japanese yen were each a tad higher.

The dollar index, which measures the US currency’s strength against a basket of major currencies, was at 96.819, down from its previous close of 96.838.

(Bloomberg contributed this story)

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