Rupee Hits Record Low Amid Rising Oil Prices and Dollar Demand
Two Much! Dollar demand, rising oil push rupee to new closing low
The Economic TimesImage: The Economic Times
The Indian rupee closed at a record low of 94.85 per dollar on Wednesday, driven by high oil prices and strong dollar demand. The Reserve Bank of India is expected to intervene to prevent further depreciation beyond the 95 per dollar mark, which is seen as a critical psychological threshold.
- 01Rupee closes at a record low of 94.85/$, previously at 94.54/$.
- 02High oil prices are significantly impacting India's import bill and inflation.
- 03The Reserve Bank of India is likely to intervene to stabilize the rupee.
- 04Traders anticipate volatility in the rupee, with resistance at 94.40/$ and support at 95.25/$.
- 05Brent crude oil prices rose over 3%, impacting other Asian currencies.
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On Wednesday, the Indian rupee fell to a record closing low of 94.85 per dollar, down from 94.54 per dollar the previous day. The decline is attributed to rising oil prices, which have surged to nearly $115 per barrel, significantly increasing India's import costs and inflation risks. This situation has led to persistent demand for dollars, putting additional pressure on the rupee. Jateen Trivedi, a currency research analyst at LKP Securities, noted that the rupee faces selling pressure even during rebounds, indicating a lack of support at stronger levels. The Reserve Bank of India (RBI) has intervened to prevent further depreciation, aiming to keep the rupee above the psychologically important 95 per dollar mark. Traders expect the rupee to remain volatile, with resistance levels at 94.40/$ and support at 95.25/$. Other oil-sensitive Asian currencies, such as the Philippine peso and Indonesian rupiah, also hit record lows due to the rising oil prices.
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The weakening rupee could lead to higher import costs, affecting prices of goods and services in India, which may increase inflation for consumers.
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