Rupee tumbled to its all-time low on Monday, dragged down by rising crude oil prices and increased demand for the greenback. The currency began the day at 92.20 against the US dollar, but slipped to 92.528 in early trading. The sharp plunge comes after a sharp spike in global oil prices. Brent crude, the global benchmark, jumped over 25% to trade at $118 per barrel in futures trade as the war between US-Israel and Iran intensified. Experts said that the sharp rise in crude oil has also increased demand for dollars, particularly from oil importers, adding strain on the currency. According to forex traders, rupee also faced pressure from strong foreign institutional investor outflows and a steep decline in Dalal Street. Meanwhile, rupee had already ended the previous session weaker, declining 18 paise to settle at 91.82 against the US dollar on Friday. “Rupee will remain vulnerable to the rising oil prices which have risen by more than 28% since the last closure on Friday. Asian currencies were also lower on Monday,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said. He further noted that the currency could weaken further if oil prices stay elevated. Rupee might touch 93.00 if oil remains above $100 in the coming trading sessions, he added. Reserve Bank of India’s intervention could help manage the volatility, analysts said, if the pressure on rupee persists. K N Dey, a currency specialist, told ANI, “Rupee opened with a gap of 46 paisa from Friday’s closing at 92.20. Presently 92.29/30. RBI intervention would act as a speedy breaker and to protect any high volatility. There is a huge demand of dollars also from importers and Oil companies. Uncertainty will remain till we see some actual signs of de-escalation and restoration of Supply Chain management.“Ponmudi R, CEO of Enrich Money, highlighted that the USD/INR pair has reached new highs amid geopolitical tensions and rising oil costs. He said, “The USD/INR pair is currently trading at fresh all-time highs, hovering near the 92.30-92.32 zone. Rising geopolitical tensions in the Middle East have disrupted critical oil transit routes, pushing crude prices higher and triggering a flight to safety toward the US dollar. For India, higher oil import costs and dollar strength are exerting sustained downward pressure on the rupee.”Ponmudi also pointed out that the chart remains bullish for the US dollar. “The chart structure remains bullish in favour of US dollar, supported by an upward trend with consistent higher highs and higher lows in recent months. A sustained move above 92.30-92.32 could extend the rally toward higher levels.”On the downside, he noted, the 91.90-92.00 range provides immediate support. “A break below this level may trigger short-term profit booking or possible intervention by the Reserve Bank of India, though the broader bias remains positive amid global uncertainties,” he added. Meanwhile, the dollar index, which tracks the greenback against a basket of six major currencies, rose 0.66% to 99.64. Back in India, Dalal Street continued to trade under pressure as benchmark indices saw a sharp sell-off in early trade. The Sensex plunged over 2,400 points, while the Nifty dropped 708.75 points to trade below 24,000. Exchange data showed that foreign institutional investors were net sellers in the previous session, offloading equities worth Rs 6,030.38 crore on Friday. Separately, the Reserve Bank said India’s foreign exchange reserves increased by $4.885 billion to reach a record high of $728.494 billion in the week ended February 27.
