Rupee Hits Record Low of 96/$ Amid Rising Crude Prices, RBI Intervenes
Mayday: Rupee breaches 96 wall, pulls back after RBI intervention
The Economic TimesImage: The Economic Times
The Indian rupee fell to a record low of 96.14/$ on Friday, pressured by rising crude oil prices nearing $110 per barrel. The Reserve Bank of India (RBI) intervened to stabilize the currency, which closed at 95.96/$. Policymakers are exploring measures to attract dollar inflows to support the rupee amidst ongoing geopolitical tensions.
- 01The rupee has depreciated 3.08% in FY27 and over 10% in FY26.
- 02The Indian government recently increased import duties on gold and silver to curb imports.
- 03Analysts expect measures to attract dollar inflows to be introduced in the next 2-3 months.
- 04Sajal Gupta from Nuvama believes the rupee's decline will slow, predicting it won't breach 97/$ quickly.
- 05The State Bank of India warns that further depreciation could negate benefits from recent fuel price hikes.
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On Friday, the Indian rupee breached the significant threshold of 96/$, hitting a record low of 96.14/$ as crude oil prices approached $110 per barrel. This decline has intensified pressure on Indian policymakers to devise strategies to attract long-term dollar inflows to stabilize the currency. Following the RBI's intervention, the rupee managed to close at 95.96/$, down 20 paise from the previous close. Alok Singh, head of treasury at CSB Bank, noted that the ongoing geopolitical crisis in West Asia has contributed to the rupee's volatility. Discussions are underway regarding potential measures to boost dollar inflows, with expectations that these will be rolled out in a phased manner over the next 2-3 months. The government has already taken steps such as increasing import duties on gold and silver to mitigate the currency's decline. Analysts predict that while the rupee's depreciation may slow, it remains critical to monitor oil prices and their impact on import costs. The State Bank of India cautions that further depreciation could undermine the benefits of domestic fuel price adjustments.
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The depreciation of the rupee could lead to higher import costs, affecting prices for consumers and businesses reliant on imported goods.
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