Rupee Record Low: The rupee continued its downward slide, opening weaker by nearly 18 paise at 96.38 against the US dollar, matching the record low seen in the previous session. The domestic currency had settled at 96.3450 on Monday after touching an all-time low of 96.3875 during the day.
Pressure on the rupee remains driven by a surge in US bond yields, elevated crude oil prices, and ongoing global uncertainty. Meanwhile, the dollar index, which measures the greenback against a basket of six major currencies, was slightly lower at 99.10, down 0.09 per cent.
“Indian rupee remains vulnerable to the rise in oil prices as the closure of the Strait hampering its exports and imports to the Gulf Countries. Indian government again raised the petrol and diesel prices by Rs. 0.90 per liter for a second time in the current week. Exporters need to continue to sell the Dollar as Indian Govt./RBI are expected to take some major step to increase the flows into the Indian economy which is plagued by outflows in the last three months,” said Anil Kumar Bhansali, Head Of Treasury, Finrex Treasury Advisors LLP.
Global oil prices surged past the USD 110 mark, driven by escalating tensions in West Asia and heightened geopolitical uncertainty, while U.S. equity markets closed sharply lower amid rising bond yields and weakening investor sentiment. Brent crude was last seen at around USD 111.4 per barrel, up about 2 per cent, while WTI crude climbed to USD 108, rising over 2.4 per cent
Oil prices have remained highly volatile, with concerns mounting over potential supply disruptions at the Strait of Hormuz, a critical maritime chokepoint that handles nearly 20 per cent of global oil flows, heightening inflation risks for economies worldwide.
Earlier on April 30, Brent climbed near a multi-year high of USD 126 a barrel, gaining nearly 7 percent intraday, extending the momentum built on the back of a strong surge earlier. Before, on March 9, Brent crude surged over 27 per cent to trade at a multi-year high of USD 119 a barrel amid escalating Middle East tensions.
The Indian rupee could weaken further and approach the psychologically significant 100 mark against the US dollar within the next six months if external pressures, particularly elevated oil prices, persist, Bhansali had earlier said.
Bhansali said that policy intervention could slow or even reverse the rupee’s slide. “If government of India doesn’t take any further steps… then the pressure continues,” he said, while listing potential measures such as tweaking FII tax norms, reducing outward remittance limits under the Liberalised Remittance Scheme, and attracting fresh inflows through instruments like foreign bonds or NRI deposit schemes. “If such types of measures are taken, then we can see the rupee’s depreciation pausing…the dollar will be moving down,” he added.
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