The intensifying West Asian war, with the US-Israel alliance pounding Iran and the latter retaliating with drone/missile strikes is having a telling effect on the Rupee, which is fast depreciating towards the 94 to the US Dollar mark.
Soaring energy prices, re-routing of trade routes and FPIs pulling out of the domestic equity markets is weakening the Rupee.
Opening about 14 paise weaker at 93.8475, the Indian currency has tested a high/low of 93.81/93.95 per USD in intraday trades so far. It is currently trading at 93.9175 so far.
Amit Pabari, MD, CR Forex Advisors, said: “As uncertainty rises, the U.S. dollar has strengthened. This is not just because of its safe-haven status, but also because the U.S. is a net energy exporter, unlike most of Asia and Europe. In an environment of rising oil prices, this gives the dollar a clear advantage.
“For the rupee, this creates a double impact. Higher oil prices increase India’s demand for dollars, while a stronger global dollar makes it more expensive to access. As a result, the war brings nothing but pressure for the rupee in the near term.”
Pabari noted that the rupee is now approaching an important level — the 94.00 mark is expected to act as a strong resistance, given its psychological significance. On the downside, support is seen in the 92.80–93.00 range.