Noida, July 17 (APAC Media): The Indian rupee remained under pressure on Friday, trading close to its record low against the US dollar as a surge in crude oil prices, subdued foreign fund inflows and increased demand for the greenback weighed on the domestic currency.
The rupee slipped towards the 96.30-per-dollar mark, staying close to its lifetime low of 96.83 recorded earlier. Market participants said the currency continues to face headwinds from global uncertainty and rising import costs.
“Crude oil prices have emerged as a major concern for the rupee. Higher oil prices increase India’s import bill and create additional demand for dollars,” said a foreign exchange dealer.
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India, which imports a large share of its crude oil requirements, faces greater pressure on its trade balance whenever global energy prices rise. Analysts said a stronger US dollar globally has further added to the rupee’s weakness.
“Dollar demand from importers, coupled with cautious foreign investor sentiment, has kept the rupee under pressure. The market is closely watching global risk factors and crude price movements,” said an analyst tracking currency markets.
Foreign investors remain cautious.
Weak foreign portfolio inflows have also contributed to the rupee’s decline. Investors have adopted a cautious approach towards emerging markets amid geopolitical tensions and uncertainty over global interest rate movements.
“Foreign fund flows remain an important factor for the rupee. Sustained inflows could provide support, but current global conditions are making investors more selective,” said a market expert.
The RBI keeps watch on currency movement.
The Reserve Bank of India has been monitoring the currency market and intervening periodically to prevent excessive volatility.
Traders said state-run banks have participated in dollar selling operations, indicating possible central bank support.
“The RBI’s objective is not to defend a particular level but to ensure orderly movement in the foreign exchange market,” a banking source said.
Outlook remains challenging.
Currency traders expect the rupee to remain sensitive to crude oil prices, movements in the US dollar index and foreign investment trends in the coming sessions.
“Near-term movement will depend on how global markets respond to geopolitical developments and whether oil prices continue to remain elevated,” said a currency strategist.
Market participants believe that while RBI intervention may limit sharp declines, sustained pressure on the rupee could continue if global risks remain elevated.
–ENDS–
Disclaimer: This article is for informational purposes only. APAC Media is not liable for any investment decisions or losses. Please conduct your own research or consult a financial advisor before investing.
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