The Indian rupee fell past the psychologically crucial 93 mark against the US dollar on Friday, extending its decline as one of Asia’s worst-performing currencies this year amid tensions in West Asia.
The domestic currency fell as much as 64 paise, or 0.69 per cent, to a record low of 93.28 against the US dollar on Friday, according to Bloomberg data. It had closed at 92.63 in the previous session. The rupee is down 3.64 per cent so far this year, making it one of the worst-performing currencies among its Asian peers.
“The rupee looks very vulnerable, and unless oil prices fall significantly towards $80 per barrel, outflows could remain higher than what the government has budgeted, impacting both the current account deficit and the fiscal deficit,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
“We await the Reserve Bank of India’s (RBI’s) action this morning. Until then, any dips are likely to be bought into, while exporters may hold off on selling until a correction in oil prices is seen,” he added.
On Thursday, Brent crude oil rose as much as 10.9 per cent to $119.1 per barrel and pared gains to trade at $107.2 on Friday morning. The recent rally in oil prices comes as Israel struck Iran’s South Pars gas field.
Iran later warned Gulf nations that several energy facilities are now “legitimate targets” after Israel struck its South Pars gas field. Later, Prime Minister Benjamin Netanyahu on Thursday said Israel would avoid future attacks on Iran’s energy infrastructure. Also. US President Donald Trump suggested he was not looking at deploying soldiers to West Asia.
Meanwhile, a 10 per cent gain in global crude prices leads to a 15 basis- point drop in economic growth and a 30 basis-point rise in inflation, Bloomberg reported, quoting the central bank.
Meanwhile, the dollar index was up 0.2 per cent as oil prices retreated from Thursday’s highs after the US and Israel efforts to ease concerns over the Iran war.
“USD/INR is trading above the 92.8 level, reflecting continued pressure on the Indian rupee amid elevated crude prices and global risk aversion. The structure remains bullish, supported by a pattern of higher highs and higher lows,” said Ponmudi R, chief executive officer at Enrich Money. “A sustained move above 93.00 would strengthen the upside bias, with resistance seen in the 93.20-93.40 range. On the downside, support is placed at 92.70, followed by 92.50–92.40,” he added.
==========
(Disclaimer: The views and investment tips expressed by the analysts in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)
