The Indian rupee hit an all-time intraday low of 95.34 against the US dollar on Monday, as global crude oil prices surged past $122 per barrel. The currency opened at 94.80 and weakened further, breaking its previous record low of 95.14 set earlier this month.
Crude Oil Prices Soar
Brent crude oil futures crossed the $122 mark for the first time since 2014, driven by supply concerns amid geopolitical tensions and strong demand. The spike in oil prices has put additional pressure on the rupee, as India imports over 80% of its crude oil requirements.
Impact on Indian Economy
The sharp depreciation of the rupee is expected to increase the cost of imports, leading to higher inflation and a wider current account deficit. Analysts predict that the rupee may continue to weaken in the near term, with the Reserve Bank of India (RBI) likely to intervene to curb volatility.
Market participants are closely watching the RBI's monetary policy stance, as the central bank may consider raising interest rates to support the currency. However, higher rates could dampen economic growth, which is already facing headwinds from global uncertainties.
Global Factors Weighing on Rupee
The dollar index, which measures the greenback against a basket of major currencies, strengthened to near 102 levels, adding to the rupee's woes. Foreign portfolio investors have also been pulling out funds from Indian equities, further pressuring the currency.
Meanwhile, the Indian stock market witnessed a sharp sell-off, with the benchmark Sensex falling over 1,000 points in early trade. The volatility in global markets is expected to persist in the coming days, as investors assess the impact of rising oil prices and geopolitical developments.
