The Indian rupee weakened to a record closing low of 94.85 against the US dollar on Wednesday, declining 0.32 per cent amid rising crude oil prices and sustained foreign capital outflows.
The currency reversed its earlier gains seen in April, as global oil prices surged, with Brent crude rising over 3 per cent to near USD 115 per barrel. The upward movement in oil prices, alongside a stronger dollar, exerted pressure on emerging market currencies, with peers such as the Philippine peso and Indonesian rupiah also touching record lows.
Oil prices have remained elevated due to ongoing geopolitical tensions, particularly linked to disruptions around the Strait of Hormuz, which has constrained supplies from West Asia. Although signals from the UAE regarding a possible exit from OPEC and OPEC+ moderated gains, prices continued to hover near recent highs.
So far this calendar year, the rupee has depreciated by over 5 per cent. Analysts attributed the latest weakness to a combination of high crude prices, a firm US dollar, and tight domestic liquidity conditions, with importer demand outpacing supply.
Recent regulatory steps by the Reserve Bank of India, including tightening and partial easing of forex-related norms, initially supported the currency but have since lost impact. Market participants noted that adjustments to these measures, particularly easing restrictions on certain arbitrage trades, contributed to a shift in sentiment.
With underlying pressures persisting, dealers expect the rupee to remain under strain in the near term, tracking movements in oil prices and broader global currency trends. |
