The rupee fell to a fresh record low on Friday, slipping past the 96 mark against the US dollar as rising 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, crossing its previous all-time low of 95.9575 touched in the previous session.
Rupee has been under pressure in recent weeks as oil prices surged amid the conflict in West Asia and tensions around the , a key global oil shipping route.
Brent crude prices remained close to USD 110 per barrel on Friday, increasing concerns over India’s import bill and putting pressure on the country’s external sector.
India imports over 85% of its needs, making the
A weaker rupee also makes imports more expensive because crude oil is bought globally in US dollars. This increases pressure on inflation, fuel costs and the overall economy.
The rupee has now weakened steadily over the past few sessions as investors remain worried about:
The Reserve Bank of India has reportedly been intervening in the currency market to reduce excessive volatility and slow the pace of the rupee’s fall.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd, said that the rupee touching a new record low around Rs 96.06 against the US dollar reflects rising global uncertainty and sustained demand for the dollar.
“Higher crude oil prices are increasing India’s import costs, while strong US interest rates and foreign fund outflows are putting additional pressure on emerging market currencies, including the rupee,” he added.
“A weaker rupee can increase inflationary pressure in India because imports such as fuel, electronics, and industrial raw materials become more expensive. On the other hand, sectors that earn significant revenue in dollars, including IT and pharmaceutical companies, could see some benefit from improved earnings realisation,” said Gour.
Going ahead, market sentiment will largely depend on crude oil prices, global geopolitical developments, foreign investor activity, and the Reserve Bank of India’s measures to manage currency volatility.