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The Indian rupee has hit a fresh-low, breaching the 96-mark against the US dollar for the first time. The Indian rupee has been under pressure since the Iran war as tension has been rising at the Strait of Hormuz, a vital global oil shipping route.
The increasing crude oil prices and the ongoing West Asia conflict continued to pressure the currency. The rupee weakened 0.3% to 96.05 against the dollar, surpassing its previous all-time low of 95.9575.
On Friday, Brent crude prices remained close to USD 110 per barrel, increasing concern over India’s import bill. India imports nearly 85% of its crude oil, making the rupee highly sensitive to rising global oil prices.
The Indian rupee has been one of the worst-performing currencies in Asia. Experts pointed out that the currency’s performance is heavily dependent on crude oil prices. If the oil prices keep increasing up to $140-$150 per barrel, it could intensify pressure on the Indian rupee.
A weaker rupee makes imports more expensive because crude oil is bought globally in US dollars. This increases pressure on inflation, fuel costs and will also have an impact on the overall economy.
Experts opined that policy intervention will be required for rupee to stabilise amid soaring oil prices. The RBI has reportedly been intervening in the currency market to reduce excessive volatility and check the pace of the rupee’s fall. Spike in crude oil prices leads to more dollar outflows, thereby depreciating the rupee.
The fall in rupee’s value would increase the prices of electronics, gold, luxury cars, watches, oils, and natural gas, imported from other countries. It would also lead to a rise in the prices of essentials. Parents of Indian students pursing academics in foreign countries will also feel burdened due to falling rupee.
Tags Rupee dollar
