Rupee Snaps Five-Day Gain on Middle East Tensions, Dollar Demand

India’s rupee fell for the first time in six days on concern capital flows to emerging markets will slow amid intensifying conflict in the Middle East while oil importers stepped up dollar purchases.

Israel shot down a Syrian fighter jet after it flew over the Golan Heights, the Israeli army said today. The attack came as the U.S. launched its first airstrikes against Islamic State positions in Syria in a major expansion of its campaign to defeat the militants.

“The rupee weakened due to the deteriorating geopolitical situation in the Middle East,” said Naveen Raghuvanshi, a Mumbai-based currency trader at DCB Bank Ltd. Dollar Demand from oil companies also impacted the rupee, he said.

The Indian currency weakened 0.2 percent to close at 60.9475 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. It fell as much 0.3 percent earlier.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell five basis points, or 0.05 percentage point, to 6.90 percent.

Three-month offshore non-deliverable forwards fell 0.2 percent to 61.89 per dollar, according to data compiled by Bloomberg. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

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