Rupee closes at 7-week low on tensions along LoC

Kolkata: The rupee closed at a seven-week low on Tuesday after traders rushed to buy dollars on news of Indian Army destroying Pakistani bunkers along the Line of Control (LoC).

The Indian currency closed 0.53 per cent weaker at 64.89 per dollar against Monday's close of 64.55, foreign exchange dealers said.

Tuesday's closing level was last seen on April 3, 2017.

"The market has taken the attack negatively. The possibility of rupee breaching the 65 level again cannot be ruled out," said K N Dey, an independent forex market analyst.

However, Dey said the weakness may be temporary given the low dollar index.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 97.314, up 0.18 per cent from its previous close of 97.142. When Donald Trump took oath as the 45th US President in January, the index was over 100.

A video clip released by Indian Army on Tuesday showed heavy artillery bombing targeting Pakistan Army forward posts in Naushera sector along LoC.

"The rupee's weakness was news-based and it may open over 65 if more such news comes in," said Paresh Nayar, head of currency and money markets at FirstRand Bank India.