Rupee Falls Sharply to 92.28 Against US Dollar in Early Trade
Rising crude oil prices and global tensions push the Indian currency close to its record low.
The Indian rupee dropped sharply by 46 paise to 92.28 against the US dollar in early trading on Monday, moving close to its all-time intra-day low. Currency traders attributed the decline to a surge in global crude oil prices and the strengthening of the US dollar amid escalating tensions in the Middle East.
At the interbank foreign exchange market, the rupee opened at 92.22 against the US dollar and soon weakened further to 92.28. The currency had previously touched its all-time intra-day low of 92.35 on March 4.
The spike in oil prices added significant pressure on the rupee. Global benchmark crude, Brent crude, jumped by about 25.68 percent to around USD 116.5 per barrel in futures trading. Analysts say the increase comes as geopolitical tensions intensify following the conflict involving the United States, Israel, and Iran.
Forex traders also pointed to heavy outflows by foreign investors and a sharp fall in domestic stock markets as additional factors weakening the rupee.
On Friday, the rupee had already slipped by 18 paise to close at 91.82 against the American currency.
According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, the rupee may remain under pressure as oil prices continue to rise. He noted that oil prices have surged more than 28 percent since the previous trading session on Friday, and several Asian currencies also opened lower on Monday.
Bhansali added that the rupee could potentially slide further to 93 per dollar if crude oil prices remain above USD 100 in the coming sessions.
Meanwhile, the US Dollar Index, which measures the strength of the dollar against a basket of six major currencies, was up 0.66 percent at 99.64.
Indian stock markets also saw a sharp fall in early trading. The BSE Sensex dropped 2,345.89 points to 76,573.01, while the Nifty 50 fell 708.75 points to 23,741.70.
Exchange data showed that foreign institutional investors sold equities worth ₹6,030.38 crore on a net basis on Friday, adding to the pressure on financial markets.
Despite the currency volatility, India’s foreign exchange reserves rose by USD 4.885 billion to reach a record high of USD 728.494 billion for the week ended February 27, according to data released by the Reserve Bank of India.
