Rupee Strengthens 40 Paise Against Dollar As Crude Oil Prices Ease

The Indian rupee strengthened around 40 paise against the U.S. dollar in early trade on Tuesday, March 10, supported by a sharp decline in crude oil prices and improved global risk sentiment, according to market data and Reuters.

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The domestic currency opened at about ₹91.92 per U.S. dollar compared with the previous close of ₹92.32. In early trading, the rupee was quoted around ₹91.93 per dollar after touching a record low of about ₹92.35 in the previous session.

The rebound in the rupee followed a sharp decline in global crude oil prices after indications that the conflict in West Asia could ease sooner than expected.

Fall In Crude Oil Prices Supports Currency

Brent crude prices dropped significantly during early trading hours. According to Reuters, Brent crude futures declined more than 10% to around $88.50 per barrel after previously reaching a panic high of about $119.50 per barrel during the prior trading session amid escalating geopolitical tensions.

In another trading update, Brent crude was reported near $87 per barrel after touching nearly $120 per barrel earlier.

The decline in crude oil prices followed comments by U.S. President Donald Trump indicating that the conflict involving Iran could conclude sooner than initially expected.

Lower oil prices are generally supportive for the Indian currency because India imports a large share of its energy requirements from global markets.

Impact Of Oil Prices On The Rupee

Crude oil prices have a direct influence on India’s external balances and currency movements.

A sustained rise in oil prices can cause the Indian current account deficit to widen and the imported inflation to rise, which can negatively affect the Indian rupee, as per the views and opinions of market analysts as reported by Reuters.

India imports its crude oil through the Strait of Hormuz, which is an important shipping lane that transports a significant portion of the world’s oil traffic.

Geopolitical tensions in West Asia have previously disrupted shipping activity in the region and triggered volatility in energy markets.

RBI Monitoring Currency Movements

Domestic policy actions have also played a role in stabilising the currency. According to market participants cited in reports, the Reserve Bank of India has intervened in currency markets through spot and offshore non-deliverable forward markets to manage volatility.

The rupee had depreciated more than 1.5% during the month as geopolitical tensions and rising crude oil prices triggered risk aversion across global markets.

However, the decline in oil prices and the improvement in the global market helped the Indian rupee regain its value in the early trade sessions on March 10.