Rupee Falls To Record Low Of 95.27 Against U.S. Dollar Amid Oil Surge

The Indian rupee weakened to an all-time low of 95.27 against the U.S. dollar on Thursday, April 30, pressured by rising global crude oil prices, a stronger dollar and persistent foreign institutional investor (FII) outflows.

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The domestic currency opened 17 paise lower at 95.02 per dollar compared to the previous close of 94.85 and slipped further in early trade. This marked the sixth consecutive session of decline for the rupee.

The latest fall came as Brent crude prices crossed $123 per barrel after the U.S. indicated it would continue restrictions on Iranian ports until Tehran agreed to a nuclear deal, according to Bloomberg. West Texas Intermediate crude traded above $107 per barrel.

Oil Prices And Dollar Strength Pressure Rupee

Higher crude oil prices have increased pressure on the rupee because India imports nearly 90% of its crude oil requirements. Rising oil prices generally increase the country’s import bill and widen the trade deficit.

The dollar index remained above the 100 mark on April 30, supported by safe-haven demand amid geopolitical tensions in West Asia. A stronger U.S. dollar typically reduces investor appetite for emerging market currencies, including the rupee.

According to Reuters, the U.S. Federal Reserve kept interest rates unchanged at 3.50%-3.75% during its latest Federal Open Market Committee meeting on April 29. The decision saw four policymakers dissent, making it the most divided policy outcome since 1992.

Market participants tracked the Federal Reserve’s commentary closely as uncertainty over the Iran conflict and elevated oil prices continued to cloud the global economic outlook.

Equity Market Weakness Adds To Pressure

Domestic equity benchmarks also witnessed sharp losses during the session. The Sensex dropped nearly 1,700 points during intraday trade, while the Nifty declined around 500 points.

From exchange rate data, foreign institutions continued to sell their positions in Indian stocks, thereby raising the demand for the U.S. dollar in the local currency market.

The rupee has now erased most of the gains recorded earlier in April after the Reserve Bank of India introduced measures to curb excessive speculation in the offshore non-deliverable forwards market.

RBI Monitoring Currency Movement

Currency traders said importers have increased hedging activity to protect themselves against further volatility in the rupee. The Reserve Bank of India has also been monitoring currency movement amid rising pressure from global factors.

The rupee’s movement continues to be influenced by global crude oil prices, capital flows, and monetary policy decisions by major central banks. Rising tensions in West Asia and higher energy prices are still having an effect on currency markets around the world.