Rupee Crashes as Brent Hits $100: RBI Struggles to Defend Currency
The Indian rupee has slid past 95 per US dollar, hitting a new low of 95.2250 on Wednesday.
According to bankers quoted by Reuters, crossing this level was like a 'reality check' for the rupee, triggering stop-loss selling that added to its decline.
The Reserve Bank of India (RBI) had been actively trying to support the currency, but oil prices are proving to be a major obstacle. Brent crude's move towards $100 a barrel is putting pressure on the rupee, making it harder for the RBI to hold the line in the spot market without depleting foreign-exchange reserves.
India is the world's third-largest oil importer, and when crude prices rise, local companies need more dollars to import oil. This increased demand for dollars makes it challenging for the RBI to defend the rupee.