Rupee Falls To Fresh Record Low Of 95.33 Against U.S. Dollar Amid Oil Price Surge

The Indian rupee opened at a new lifetime low of 95.33 against the U.S. dollar on May 5, extending losses for the fifth straight trading session as higher crude oil prices and strong demand for the dollar continued to weigh on the domestic currency.

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The rupee opened 25 paise weaker compared to its previous close of 95.08 against the dollar on May 4. The decline comes as global crude oil prices remain elevated due to ongoing tensions in West Asia and disruptions around the Strait of Hormuz, a key global oil shipping route.

According to market data, Brent crude prices remained above $100 per barrel, increasing concerns over India’s import bill as the country depends heavily on crude oil imports. Higher oil prices generally increase dollar demand from oil marketing companies, which puts additional pressure on the rupee.

Dollar Demand Continues To Rise

The U.S. dollar remained firm in global markets amid safe-haven demand linked to geopolitical uncertainty in the Middle East. The dollar index stood at 98.48 after rising 0.3% in the previous trading session.

Currency market participants tracked continued fighting in the Gulf region and developments related to shipping activity near the Strait of Hormuz. The region remains important for global energy supplies, and disruptions have kept oil prices volatile over recent weeks.

According to Finrex, the rupee remained under pressure due to simultaneous strength in the dollar index and elevated crude oil prices. The firm said oil companies and foreign portfolio investors continued purchasing dollars, adding pressure on the domestic currency.

Asian Currencies Show Mixed Trend 

Asian currencies traded mixed against the U.S. dollar during early trade on May 5. The South Korean won and the Chinese renminbi recorded modest gains of 0.13% and 0.15%, respectively.

The Japanese yen remained largely unchanged during the session. Of the weaker regional currencies, the rupiah of Indonesia fell by 0.32% to register the biggest decline amongst the key Asian currencies being observed for the day.

The divergent trends witnessed in Asian currencies stemmed from the risk aversion seen across various markets in light of crude oil prices and other geopolitical issues.

Pressure Builds From Crude Oil Prices

The rupee has remained under pressure in recent weeks as rising crude oil prices increased concerns over inflation and India’s current account deficit. Higher oil prices also increase import costs for the country and typically raise demand for dollars in domestic markets.

Currency markets will continue to track oil price movements, global risk sentiment and geopolitical developments in West Asia in the coming sessions as the rupee trades near record low levels against the U.S. dollar.