The Indian rupee touched a new intraday low of 92.49 against the US dollar on Friday. This steep fall is mainly driven by Brent crude prices shooting up to around USD 100 to 106 per barrel. The sudden rise in crude oil is putting a lot of pressure on the domestic currency and widening the import bill. Experts suggest this currency movement will soon impact the pockets of the common man.
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Why is the Rupee Falling Against the Dollar?
The primary reason behind the falling rupee is the global geopolitical tension that caused crude oil prices to surge. Reports show crude reaching up to USD 106 per barrel due to attacks on energy infrastructure and issues at the Strait of Hormuz.
Jateen Trivedi from LKP Securities pointed out that the volatile crude prices and a stronger US Dollar Index are pushing the rupee down.
Foreign Institutional Investors also pulled out heavily, selling equities worth roughly Rs 7,049 crore in a single day, adding more pressure to the domestic market.
How the RBI is Handling the Situation
To stop the rupee from falling too fast, the Reserve Bank of India stepped into the foreign exchange market. The RBI acted as a speed breaker to control the sudden drops rather than fixing the rupee at a specific number.
They also conducted an Open Market Operation purchase auction of Rs 50,000 crore to add liquidity to the banking system and support against major cash outflows.
Currency expert K N Dey mentioned to ANI that the market is currently in a highly speculative zone where major intraday movements are possible.
What This Means for Common People
When the rupee falls and crude oil prices go up, importing goods becomes much more expensive for India. This situation leads to an extra foreign currency outflow of around USD 7 to 8 billion every month.
For the average person, this means a likely increase in retail inflation. The costs of daily necessities, particularly petrol, diesel, and LPG, are expected to rise.
Analysts from major financial firms warn that if the global conflicts continue, the rupee might test the 93.00 to 94.00 range soon.
