Indian rupee oil-fuelled slide to persist, RBI support seen offering limited relief
- The Indian rupee is expected to open in the 95.15-95.20 range, per traders, having settled at 95.1050 to the dollar on Wednesday
MUMBAI: The Indian rupee faces another day of pressure from rising oil prices, with the central bank’s support likely to temper rather than reverse the currency’s decline.
The Indian rupee is expected to open in the 95.15-95.20 range, per traders, having settled at 95.1050 to the dollar on Wednesday.
The South Asian unit has dropped about 0.7% over the past two days after largely shrugging off the rise in oil prices in the prior sessions.
The latest slip suggests the impact of higher crude prices is beginning to show more clearly, despite the Reserve Bank of India’s interventions, bankers said.
“The rupee’s dynamics appear to have changed after a period of resilience. With oil prices continuing to climb and offering little prospect of near-term relief,” a currency trader at a bank said.
“The RBI has maintained its intervention, including a fairly forceful presence at one point yesterday. However, that support has so far provided only limited relief.”
The rupee in the last two sessions has shown higher sensitivity to oil prices than other Asian currencies that are similarly exposed to crude, traders said.
That could partly reflect the currency giving back some of the relative immunity it had shown to oil moves in the period leading up to the past two days, they said.
Relentless oil rise
Brent crude remained above the $100-a-barrel mark, a sensitive point for import-oil-dependent India, on Thursday, with the conflict between Iran and the U.S. intensifying.
The latest military strikes on shipping have heightened concerns over the extent and duration of supply constraints.
The US 10-year Treasury yield climbed to its highest since 2023, pressured by the disappointing Treasury buyback and a renewed surge in oil prices, compounding pressure on the rupee.