Forex
Rupee Under Pressure as Oil Prices Weigh on India's Economy
The Indian Rupee has been facing pressure from higher oil prices and improving capital flows. According to DBS Group Research economist Radhika Rao, India's onshore markets are being pulled between these two opposing forces.
Rising crude prices have pushed up the USD/INR, forcing a strong intervention response from the central bank to keep the domestic currency from revisiting record lows.
The spot-neutral nature of inflows under the swap windows has constrained the room for sharp gains in the rupee. The rupee has depreciated 1.1% this month and a cumulative 6% on CYTD, against the dollar.