Indian rupee hits record low at 92.33 vs dollar. Photo: Gemini
The Indian rupee fell to an all-time low on Monday even as the central bank intervened before the open and again after trading began, underscoring the intense pressure from a surge in oil prices.
Following the Reserve Bank of India’s pre-market intervention, the rupee INR=IN opened at 92.1975 per U.S. dollar, higher than the levels indicated by the non-deliverable forward market.
However, the relief proved fleeting as the currency came under constant pressure from dollar-buying across market participants, pushing the rupee to a fresh lifetime low of 92.33.
The RBI’s pre-market intervention and the rupee’s further fall came amid a further jump in oil prices. The intensifying Iran conflict deepened supply concerns, pushing Brent crude up more than 25% to about $117 a barrel on Monday, sharply accelerating last week’s rally.
Oil prices are now up more than 50% since the outbreak of the U.S.-Israeli war on Iran, leading to a broad risk-off shift in markets and pushing investors towards the safe-haven dollar.
India’s heavy dependence on imported crude raises its import bill and further increases dollar demand from refiners. The rupee is considered among the most vulnerable to the surge in oil prices in the emerging market space.
“In the event the conflict is more protracted, the risk is that EM currencies more exposed to oil, INR and PHP, will face further selling pressure,” BofA Global Research said in a note.
RBI’s pre-open intervention was a repeat of the strategy it deployed last Thursday and has used several times over in recent months.
The intervention this time was aimed primarily at containing the rupee’s losses, bankers said, whereas the objective last Thursday was to push the dollar/rupee pair lower and break the cycle of pressure on the currency.
“The message from the RBI seemed to be that it is present and watching the market. With oil prices doing what they are, it’s difficult for the central bank to actually push dollar/rupee lower,” a currency trader at a bank said.
(With inputs from Reuters)
Zubair Amin is a Senior Journalist at NewsX with over seven years of experience in reporting and editorial work. He has written for leading national and international publications, including Foreign Policy Magazine, Al Jazeera, The Economic Times, The Indian Express, The Wire, Article 14, Mongabay, News9, among others. His primary focus is on international affairs, with a strong interest in US politics and policy. He also writes on West Asia, Indian polity, and constitutional issues. Zubair tweets at zubaiyr.amin
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