Mumbai, May 18
The Indian rupee weakened further and touched a fresh all-time low of 96.25 against the US dollar in early trade on Monday as rising crude oil prices, global uncertainty and strength in the American currency continued to weigh on the domestic unit.
According to forex market experts, higher crude oil prices, ongoing geopolitical tensions, and sustained strength in the US dollar have created difficult conditions for emerging market currencies, with the rupee remaining under pressure. At the interbank foreign exchange market, the rupee opened at 96.19 against the dollar and later slipped to 96.25, down 44 paise from the previous close. On Friday, the domestic currency had breached the 96-per-dollar mark before settling at a record low of 95.81.
CR Forex Advisors Managing Director Amit Pabari said elevated crude oil prices, global uncertainty and a stronger dollar continued to remain major concerns for the rupee. He, however, noted that the government and the Reserve Bank of India had already started taking steps to manage the situation.
Pabari said the USDINR pair is expected to find support between 94.80 and 95.10, while the 96.00 to 96.50 range may act as a resistance zone in the near term. The dollar index, which measures the strength of the US currency against six major global currencies, was trading 0.04 per cent higher at 99.32 amid tensions related to Iran.
Brent crude futures also rose 1.83 per cent to USD 111.26 per barrel, adding to pressure on the rupee amid higher import costs. Finrex Treasury Advisors LLP Head of Treasury and Executive Director Anil Kumar Bhansali said rising oil prices above USD 111 per barrel could further impact the rupee as higher oil import bills increase dollar outflows from the country.
He added that foreign portfolio investor outflows and global geopolitical uncertainty were also contributing to the pressure on the Indian currency. Bhansali said easing tensions and reopening the Strait of Hormuz could help improve the situation in currency markets.
Meanwhile, the Centre recently increased import duties on gold and silver from 6 per cent to 15 per cent to reduce non-essential imports and control foreign exchange outflows. The government has also placed silver imports under a licensed regime. On the domestic equity market front, the Sensex fell 833.20 points to 74,404.79 in early trade, while the Nifty declined 234 points to 23,401.70.
Exchange data showed that Foreign Institutional Investors remained net buyers for the second consecutive trading session on Friday, purchasing equities worth Rs 1,329.17 crore. The Reserve Bank of India on Friday said the country’s foreign exchange reserves increased by USD 6.295 billion to USD 696.988 billion during the week ended May 8.
