1 day ago
Rupee falls 38 paise as oil prices and conflict rise
The Indian rupee became weaker against the US dollar on Tuesday.
It ended the day at 95.92 rupees for one dollar.
A conflict in the Middle East pushed oil prices close to $108 per barrel.
India’s oil importers needed more dollars, increasing demand for the American currency.
This created worries that inflation and India’s trade balance could worsen.
Falling Indian share markets and a stronger dollar also hurt investor confidence.
Experts expect the rupee to remain under pressure in the short term.
The Reserve Bank of India could support the rupee if it falls too much.
The rupee fell 38 paise to close at 95.92 against the US dollar on Tuesday.
Escalating Middle East tensions and Brent crude prices near $108 a barrel weighed on the currency.
Higher dollar demand from oil importers raised concerns about inflation and India’s external trade balance.
The Sensex dropped 777.94 points and the Nifty declined 279.50 points amid weak domestic markets.
The rupee may remain under pressure, although possible Reserve Bank of India intervention could provide support.
- Who
- The Indian rupee, oil importers, forex traders, investors, the Reserve Bank of India, and market analyst Anuj Choudhary were involved in the reported developments.
- What
- The rupee depreciated 38 paise to close at 95.92 against the US dollar.
- Where
- At the interbank foreign exchange market in India.
- When
- Tuesday; the markets had been closed on Monday for Ganesh Chaturthi.
- Why
- The decline was attributed to Middle East tensions, rising crude oil prices, strong dollar demand, weak domestic equities, a stronger US dollar, and concerns about global treasury yields.
Downward pressures
Potential support
Near-term rupee outlook
Downward pressures
Anuj Choudhary said the rupee is expected to trade with a negative bias because of global risk aversion, rising crude prices, supply-disruption fears, a strong dollar, and higher global treasury yields.
Potential support
The USD-INR spot price was expected to trade within a range of 95.75 to 96.15, indicating the possibility of movement within defined levels rather than an unlimited decline.
Role of the central bank
Downward pressures
Higher oil prices and dollar demand from importers could continue to pressure the rupee and raise concerns about inflation and India’s external balance.
Potential support
Possible intervention by the Reserve Bank of India could support the rupee at lower levels.
Investor positioning
Downward pressures
Weak domestic equity markets, net foreign institutional selling, and caution before the Federal Open Market Committee decision could weigh on sentiment.
Potential support
Traders may use upcoming US employment and manufacturing data, as well as the Federal Open Market Committee decision, to reassess currency positions.
Key facts
- Rupee close
- 95.92 per US dollar, provisionally
- Daily move
- Down 38 paise from the previous close of 95.54
- Brent crude
- Up 1.92% at $107.71 per barrel in futures trade
- Dollar index
- 99.61, up 0.22%
- Sensex
- Fell 777.94 points to 74,003.82
- Nifty
- Dropped 279.50 points to 23,118.60
- Foreign exchange reserves
- Rose by $44.903 billion to a record $785.706 billion in the week ended September 4
Quotes
Anuj Choudhary
Research Analyst at Mirae Asset Sharekhan
“We expect the rupee to trade with a negative bias on risk-off sentiments in global markets and worries over rising global treasury yields. Rising global crude oil prices amid fears over supply disruption and a strong dollar may also pressurise the rupee.”
CNBC TV 18
“Investors may remain cautious ahead of the Federal Open Market Committee (FOMC) meeting decision on Wednesday. USD-INR spot price is expected to trade in a range of 95.75 to 96.15.”
CNBC TV 18
Sources
Related news
Rupee Ends Six-Session Slide at 95.88 as Oil Surges
Rupee Falls to 94.84 Against Dollar Amid Middle East Tensions
Rupee Trading Reports Diverge as Oil and Tensions Weigh
Indian Rupee Slips as Crude Nears $97 Amid Tensions
Rupee Falls to 95.56 as Crude Prices and Dollar Rise
Rupee Slides to 95.79 as Oil and Outflows Weigh
Sachs Says BRICS Opposes US Unilateralism, Not America
Jim Rogers Warns US Recession and AI Bubble Are Coming
BRICS Pushes Local-Currency Trade and Faster Cross-Border Payments
