Due to the devastation in the Middle East, India’s stock market is falling heavily. Apart from the stock market, it is also affecting the Indian rupee. Today a big fall was seen in the Indian Rupee against the US Dollar. On Monday (March 9), the Indian rupee fell to an all-time low of 92.34 against the US dollar. This fall in the currency shows the increasing economic pressure on countries including India, which are heavily dependent on energy imports. The Indian rupee opened at 92.20 per dollar against 91.74 in the previous session. In early trade, it fell further, crossing its lowest level of 92.3025 last week.
Impact of rising oil prices on rupee
The Indian rupee’s decline came as crude oil prices rose, which weighed on emerging market currencies. The fall of more than 50 paise from Friday’s (March 6) closing price, one of the biggest single-day falls in months, shows increasing pressure on the rupee. Brent crude oil rose 26.4% to $117.16 per barrel due to the war and was trading around $116.4 per barrel in Asian trading earlier this week.
Traders said the Reserve Bank of India may have entered the foreign exchange market earlier in the session to stem fluctuations. According to market participants, it is believed that the Central Bank sold dollars before the opening of the domestic spot market, due to which the rupee briefly recovered from around 92.30 to 92.20 before the official opening. “Obviously, there will be a lot of pressure on the rupee today. It will probably be one-sided, and the RBI will have to intervene to calm the market,” said a currency trader at a bank.
India is the world’s third largest crude oil importer
India is the world’s third-largest crude oil importer, making the economy very sensitive to changes in global energy prices. When oil prices rise, India’s import bill increases rapidly. Since oil is priced in US dollars, a weak rupee means the country will have to pay more in the local currency to buy the same amount of crude oil.