Rupee plunges to 10-month low of 82.18 against the US dollar on oil price worries
Rupee opened at 82.02 a dollar. The US dollar held close to a six-month peak on safe haven buying as jitters over China and global growth weighed on risk appetite. Against a basket of currencies, the dollar was at 104.77, not far off the six-month high of 104.90 touched on Tuesday, Reuters reported.
Asian currencies also declined after a further rise in the US Treasury yields. The 10-year US yield climbed to 4.26% on bets that the US Federal Reserve will hold rates higher for longer. “The Indian rupee is facing increased weakness due to a combination of factors.
Firstly, historical data indicates a drop in the USD/INR exchange rate during pre-election periods, suggesting potential near-term depreciation. Additionally, rising crude oil prices, nearing $90 per barrel, are negatively impacting the rupee. Furthermore, the recent surge in the US Dollar, driven by weak risk sentiment and rising US Treasury yields, is putting additional pressure on the rupee," said Ajay Kedia, Director, Kedia Advisory.
Despite positive domestic macroeconomic data, Kedia believes the rupee remains vulnerable, having recently dipped below 83 against the USD, prompting intervention by the Reserve Bank of India (RBI). “Poor risk appetite and lower Asian market performance are further contributing to the rupee's challenges," Kedia said. He expects the rupee to test 83.60 - 83.70 levels in September.
Crude oil prices eased from their highest levels since November 2022 on worries about a supply shortage after Saudi Arabia and Russia extended their voluntary supply cuts to the end of the year. Brent crude futures fell 0.74% to $89.37 a barrel, while US West Texas Intermediate crude (WTI) futures declined 0.70% to $86.08 a barrel. Meanwhile, weakness in
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