The Indian rupee Tuesday plunged by a significant 110 paise in early trade as domestic equities saw heavy sell-off amid crucial state election results and the unexpected resignation of Reserve Bank Governor Urjit Patel.
Patel, who cited “personal reasons” for the decision that was effective immediately is the first governor since 1990, to step down before his term ends.
At the Interbank Foreign Exchange, the rupee opened weak at 72.42, showing a sharp plunge of 110 paise over its previous closing price.
On Monday, the Indian rupee tumbled 50 paise to close at 71.32 against the US dollar.
Besides, Patel’s resignation, analysts attributed the fall in the domestic currency as a knee-jerk reaction to early state election trends that suggest a win for the opposition party in key states, ahead of the general election of 2019.
Forex traders said worries on the global trade war front, sharp sell-off in domestic equity market and rising crude prices also weighed on the domestic currency.
The Sensex opened over 500 points lower. It was trading 517.97 points, or 1.48 per cent, down at 34,441.75. In a similar movement, the NSE Nifty dropped below the 10,400-mark, slumping 144.05 points, or 1.37 per cent, to 10,344.40.
Crude oil prices surged ahead after the OPEC has decided to cut production by 1.2 million bpd. The global benchmark, Brent crude oil was trading at USD 60.29 per barrel, higher by 0.53 per cent.
Meanwhile, foreign funds bought shares worth Rs116.22 crore from the capital markets on a net basis, while domestic institutional investors sold shares worth Rs 145.80 crore Monday, provisional data showed.