2 months ago
Rupee under pressure from crude surge despite RBI measures
The Indian rupee is under pressure because the price of crude oil has gone up a lot.
This makes it harder for India to import energy, which it relies on heavily.
The Reserve Bank of India (RBI) has tried to support the rupee, but experts think it might keep getting weaker.
Foreign investors are also selling more stocks in India, and the US Federal Reserve might raise interest rates, which could make things worse.
The RBI is trying to bring in more foreign money, but it might not be enough to stop the rupee from falling further.
The Indian rupee is under pressure due to a surge in crude oil prices.
The RBI has intervened to support the rupee, but it may continue to depreciate.
Foreign investors are selling more stocks in India, and the Fed might raise interest rates.
The RBI's plan to draw foreign currency deposits from the diaspora may limit losses but not prevent further depreciation.
Analysts predict the rupee could hit 98 per dollar by year-end.
- Who
- Reserve Bank of India (RBI), Foreign Investors, US Federal Reserve
- What
- Rupee depreciation due to crude oil price surge and potential Fed rate hikes
- Where
- India
- When
- Ongoing, with potential for further depreciation by year-end
- Why
- India's reliance on imported energy and its impact on the economy, along with global economic factors
Optimistic View
Pessimistic View
Rupee Stability
Optimistic View
RBI measures and foreign capital inflows can stabilize the rupee.
Pessimistic View
Rupee will continue to depreciate due to oil price surge and Fed rate hikes.
Foreign Investment
Optimistic View
Foreign investors will continue to bring in capital due to high interest rates.
Pessimistic View
Foreign investors are becoming more selective and may reduce investments in India.
Economic Impact
Optimistic View
The economy can absorb the shock with proper policy measures.
Pessimistic View
The economy will suffer from inflation, higher subsidy costs, and a wider current account deficit.
Key facts
- Current Rupee Value
- Hovering near record low
- Oil Price Increase
- More than 20% in two weeks
- Foreign Capital Inflows
- Estimated at $80 billion
- RBI Intervention
- Stepped in to support the rupee
- Foreign Investment Trend
- Net sellers of $690 million in stocks last week
- Fed Rate Hikes
- Expected later this year
- RBI's Foreign Currency Deposits Plan
- Aim to draw tens of billions from diaspora
- Banks' Mobilization
- About $17 billion as of July 17
Quotes
Barry Van Der Laan
Senior FX strategist at Monex Europe Ltd.
““A sustainable rebound in the rupee is difficult while there is potential for the Fed to hike rates later this year as well as investors remaining concerned about the growth potential in India’s IT and professional business services sectors.””
theprint.in
““Unless oil risk fades decisively and portfolio inflows become more durable, we think the path of least resistance remains modest rupee depreciation into year‑end.””
theprint.in
Sources
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