Rupee hits lifetime low, watching oil prices soar and domestic stocks weaken
The energy-sensitive rupee touched a lifetime low in early trading on Monday as global crude prices surged above $130 threatening to push up import inflation and widen the trade and financial deficits. current account of this country.
The Indian rupee was trading nearly 1% weaker at 76.92 per dollar after touching 76.96, its lowest level ever. On Friday, the rupee fell to close at 76.17 against the US dollar, its lowest close since December 15, 2021.
The rupee fell against the US dollar as increased geopolitical risks from the Russia-Ukraine conflict pushed investors into the greenback’s safe-haven appeal.
The yen and dollar traded stronger as investors turned to safe-haven assets. The dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.29% to 98.93 in early Monday trading.
Foreign exchange traders said escalating tensions between Russia and Ukraine have sent crude oil prices higher and raised concerns about domestic inflation and a wider trade deficit.
Oil prices spiked above $130, their highest since 2008 on Monday, after the US and Europe banned Russian oil imports at risk and delays in talks with Iran raised concerns. on tight supply.
What did not help was sustained foreign capital flows from the Indian capital markets. That is reflected in weaker domestic exchanges, with Sensex down more than 1,400 points and Nifty below 15,850.
According to stock exchange data, foreign institutional investors remained net sellers in capital markets on Friday as they sold off shares worth Rs 7,631.02.
Besides, foreign capital inflows continued to remain and the domestic market’s weak trend also affected investor sentiment.
India’s traditionally non-interventionist central bank may allow further depreciation of Asia’s currency since the start of the Ukraine conflict in the hope that a weaker rupee will boost competitiveness. export competition and help narrow the gap that is probably widening due to rising oil prices,” he said. Kshitij Purohit, Head of International and Commodities at CapitalVia Global Research.
“The unprecedented turmoil of the past few decades shows that the arbitrage rates against local currencies are piling up,” he added.
