Rupee Takes a Hit as Oil Prices Surge Above $100

India's rupee is under pressure after oil prices surged back above $100 per barrel. The link between oil and the rupee is straightforward: India imports most of its oil, and crude is priced in US dollars.

This means that a jump in Brent prices can quickly translate into a bigger dollar bill for Indian importers. Traders expect the rupee to open around 96.85-96.90 per US dollar after ending Thursday at 96.5725, with May's record low of 96.96 back in view.

The Reserve Bank of India (RBI) is likely to step in to smooth volatility and prevent a new low for the rupee. However, selling dollars to slow the rupee's slide can shift the strain into other areas, such as tighter liquidity and higher USD/INR forward points.