Rupee Slips on Oil Price Rise, But Analysts See Limited Downside
The Indian Rupee has depreciated against the US Dollar due to rising oil prices. Brent crude futures have extended their recovery, trading near $82 per barrel, which puts pressure on India's import bill and trade deficit. As a major crude oil importer, India needs to purchase more dollars to pay for its oil imports when oil prices rise.
The Reserve Bank of India (RBI) has been actively intervening in the foreign exchange market to smooth volatility and prevent sharp depreciation. Foreign portfolio inflows into Indian equity and debt markets have remained steady, supported by the country's strong economic growth outlook and relatively attractive yields compared to other major economies.
A currency analyst at a Mumbai-based brokerage said, 'The Rupee is likely to remain in a tight range. The RBI's presence and the overall positive risk appetite in emerging markets should cap any significant weakness, even if oil prices continue to inch higher.'