Rupee Breaches 95 Against Dollar As Rising Oil Prices And Global Tensions Weigh

The Indian rupee declined sharply on Monday, moving past the 95 level against the US Dollar for the first time in history. During the session, it touched 95.2, registering a fall of around 0.3 per cent.

By the end of trading, the rupee closed at a fresh record low of 94.83 per dollar, slightly weaker than its previous closing level of 94.81.

Over the March quarter, the domestic currency has weakened by 4.4 per cent against the dollar, indicating persistent downward pressure. Although the rupee began the session on a firmer footing following regulatory intervention, it reversed course and slipped nearly 160 paise from its opening levels.

Recent trends also show continued weakness, with the rupee declining by about 1 per cent last week, marking the fourth straight weekly drop of a similar scale.

The Reserve Bank of India introduced additional measures aimed at stabilising the currency. It instructed banks to cap their net open positions in the onshore deliverable market at $100 million by April 10.

Current estimates suggest that such positions range between $25 billion and over $50 billion, underlining the extent of exposure in the system.

Crude Oil Rally Adds to Concerns

Higher global oil prices have added to the pressure on the rupee. Escalating tensions in West Asia have driven crude prices upward, raising concerns about India’s import costs and inflation outlook.

Brent Crude climbed nearly 3 per cent to an intraday high of $116.70 per barrel, approaching a one-year high. At the same time, West Texas Intermediate advanced more than 3 per cent to move above $103 per barrel.

The decline in the rupee coincided with a steep fall in domestic equities. The BSE Sensex dropped 1,635.67 points, or 2.2 per cent, to settle at 71,947.55, while the Nifty 50 lost 488.20 points, or 2.14 per cent, to close at 22,331.40.

Foreign institutional investors continued to offload Indian equities, selling shares worth Rs 4,367.30 crore on a net basis on Friday.

Market experts suggest that ongoing geopolitical risks and elevated crude prices may continue to exert pressure on the rupee. With inflation concerns and capital outflows persisting, investors are likely to remain cautious in the near term.

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