The effect of increasing tension in the Middle East is clearly visible on the Indian currency. Sharp rise in crude oil prices, strong dollar and selling by foreign investors put pressure on the Indian rupee on Thursday. On the fourth trading day of the week, the Indian Rupee fell to 92.36 against the US Dollar. In the Interbank Foreign Exchange market, the rupee opened at 92.25 and fell further to 92.32 per dollar, which is about 31 paise less than the previous closing price. A day earlier the rupee had closed at 92.01 per dollar.
Main reasons for decline
According to foreign exchange traders, there are several reasons behind the rupee’s weakness: sharp rise in global crude oil prices, strong US dollar, heavy selling by Foreign Institutional Investors (FIIs) and fall in the domestic stock market. Global oil benchmark Brent crude rose about 9.94% to $101.12 a barrel. Pressure was also seen in the domestic stock market. BSE Sensex fell 992.53 points to 75,871.18 in early trade. NSE Nifty 50 fell 310.55 points to 23,556.30. According to stock market data, foreign investors sold shares worth Rs 6,267.31 crore on Wednesday.
Why so much pressure on the rupee?
India imports more than 80% of its oil needs. Therefore, when oil prices rise, a country’s import bill increases, and oil companies need more dollars. This directly puts pressure on the Indian rupee. Impact of global events: This surge in oil prices has come at a time when the news of an attack on an oil tanker in Iraqi waters has increased the fear of disruption in global energy supply and created an environment of uncertainty in the market. Experts believe that if tensions continue in the Middle East and oil prices remain high, the rupee may come under further pressure in the coming days.