What does a 7-paise fall mean?
The rupee moving from 95.81 to 95.88 against the dollar means the currency has weakened by 7 paise. In simple terms, it now costs ₹95.88 to buy $1, compared with ₹95.81 earlier.
For someone buying dollars, the difference is ₹0.07 per dollar. So, for every $1,000, the rupee cost would be ₹70 higher at 95.88 compared with 95.81, before any other charges.
The impact becomes larger as the dollar amount increases. For $10,000, the difference would be ₹700.
The move is small in percentage terms, but sustained rupee weakness can matter for those with dollar-linked payments or requirements.
Why is ₹96/$ important?
The ₹96-per-dollar mark has become an important level for currency traders over the past two weeks. The RBI has repeatedly stepped in when the rupee approaches this level.
The central bank’s intervention has so far prevented the rupee from sustaining a move beyond 96, despite pressure from higher oil prices, rising US Treasury yields and a firmer dollar.
A currency trader at a bank said the RBI is currently providing a buffer against the negative factors affecting the rupee, while the key question is how long that support can hold if oil prices and US yields continue to rise. The trader also said importers are increasing their hedging.What is putting pressure on the rupee?
Oil prices rose on Monday (September 28) after US President Donald Trump rejected an Iranian proposal to resolve the conflict and reopen the Strait of Hormuz, raising concerns about prolonged disruption to oil supplies.
Brent crude rose 2.5% to around $107 a barrel in Asian trading. The rise in oil prices also spilled over into US bonds, with the 10-year Treasury yield rising to 5.2%.
Higher US Treasury yields and a firmer dollar are adding to pressure on the rupee and other Asian currencies. Longer-dated US Treasury yields have also risen following robust US economic data, adding to concerns about the inflationary impact of higher oil prices.
The 10-year and 30-year US Treasury yields are now at their highest levels in nearly two decades. Strong economic data has also increased expectations of another US rate hike, with traders pricing in a more than 64% chance of a move in October.
-With Reuters inputs
