Home / Economy / Rupee falls to new low against US dollar as oil prices surge

The Indian rupee today fell to a new low of 77.73 against the US dollar as oil prices surged to near highest level in almost eight weeks, according to Reuters. The rupee had ended at 77.45/dollar on Friday. The currency and debt markets shut for a local holiday on Monday.

Brent crude futures were today trading above $114 a barrel after a sharp surge over the past few days. The crude oil benchmark gained more than 2% on Monday, following a 4% jump on Friday. Oil has rallied by more than 50% this year in extremely volatile trading as the war in Europe tightened supplies, while demand outside of virus-hit China picked up. 

India imports bulk of its oil requirement. 

Indian share markets were trading slightly higher with all eyes on the listing of state-run Life Insurance Corp, the country's biggest IPO, set for later in the session. 

Traders will also watch for central bank intervention if the currency racks up sharper losses during the session.

FIIs continue to be net sellers for the 8th straight month since October 2021, according to Mehta Equities. The FIIs camp have sold shares worth Rs. 32,701 crore mark in the month of May. In yesterday’s trade too, FIIs sold shares worth Rs. 1788.90 crore while DIIs bought shares worth Rs. 1428.40 crore.

“The rupee could remain under pressure, tracking the strength of crude oil prices. Brent crude this Tuesday morning tested $115/barrel, the highest since the last week of March. The expected Fed rate hikes, foreign equity outflows and the cut in India’s GDP projection amid soaring inflation could also weigh on sentiments. However, slight improvement in risk appetite and slight recovery on the Chinese yuan could cap weakness," said Sriram Iyer, Senior Research Analyst at Reliance Securities.

However, persistent dollar sales from state-run banks, suspected on behalf of the Reserve Bank of India, capped some of its losses, he added. 

Fed Chair Jerome Powell’s comments later today will be keenly watched to gauge any new insights on the direction of interest rates. (With Agency Inputs)

 

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