Rupee Hits New Low as Oil Prices Skyrocket, Foreign Outflows Weigh
The Indian rupee has depreciated by 27 paise to 95.79 against the US dollar in early trade on Friday, driven by high crude oil prices and foreign portfolio outflows.
According to forex traders, while record foreign exchange reserves and RBI intervention provide crucial support, rising global yields and crude trading above USD 108 continue to weigh heavily on the country's import bill.
Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, said that for the rupee, the pressure continues, and it remains in an uptrend beyond 95 due to costly oil and foreign portfolio outflows. He predicted that we could see 96, with 95 now acting as support.
The offsetting strengths include real-time record foreign exchange reserves, the RBI's active presence in the market, and strong domestic growth at 7.8 per cent. However, with crude above USD 100 and global yields rising, the import bill is the dominant force in the near term.