Rupee Crumbles Under Oil Price Pressure
The Indian rupee weakened by over 1.1% to 95.57 against the US dollar during the week of September 7-11, marking its sharpest decline in four months.
The currency's strength early in September was short-lived as rising crude oil prices and escalating geopolitical tensions pushed Brent above $102 per barrel for the first time since mid-May.
Rupee's decline intensified as the week progressed, with a single-day drop of 44 paise on September 10. The RBI intervened regularly in the spot and non-deliverable forward markets to manage volatility, but the central bank may need to provide sustained support to prevent sharper rupee depreciation.
The sharp reversal highlighted the rupee's continued vulnerability to external shocks, particularly oil prices, even as India's foreign exchange reserves stood at over $740 billion, giving the RBI significant firepower to smooth excessive movements in the rupee.