Rupee Hits Fresh Record Low. |
Mumbai: The Indian rupee weakened further on Monday and settled at a new record low of 96.35 against the US dollar in the interbank foreign exchange market.
The domestic currency opened at 96.19 and later slipped to an intraday low of 96.39 before ending the session at 96.35, down 54 paise from the previous close.
On Friday, the rupee had already crossed the 96 per dollar level before ending at its earlier lifetime low of 95.81.
Crude Oil Prices Increase Pressure
Forex traders said rising crude oil prices are one of the biggest reasons behind the rupee’s weakness. Brent crude oil prices rose 0.65 percent to USD 109.97 per barrel in futures trade.
India imports a large portion of its crude oil needs, and higher oil prices increase the demand for US dollars. This puts additional pressure on the rupee.
Traders also pointed to ongoing geopolitical tensions between the United States and Iran, which have increased uncertainty in global markets and supported the dollar.
Strong Dollar And FII Outflows Hurt Sentiment
The dollar index, which measures the strength of the US dollar against six major global currencies, was trading at 99.14.
Market experts said the stronger dollar and rising US treasury yields are affecting emerging market currencies, including the Indian rupee.
According to Anuj Choudhary of Mirae Asset Sharekhan, the rupee may continue to trade with a weak bias due to global uncertainty and foreign investor outflows. He expects the USD-INR spot price to move in the range of 96 to 96.60.
RBI Support And Government Measures
Despite the weakness, traders believe possible intervention by the Reserve Bank of India may help limit further sharp falls in the rupee.
The government has also taken steps to reduce foreign exchange outflow. Recently, import duties on gold and silver were increased from 6 percent to 15 percent. Silver imports have also been placed under a licensed regime.
India’s forex reserves, meanwhile, increased by USD 6.295 billion to USD 696.988 billion during the week ended May 8.
