The Indian rupee hit a fresh all-time intraday low against the US dollar on Wednesday, touching 96.96 in the interbank foreign exchange market. The rupee finally closed at 96.82 per dollar, down 29 paise from its previous close of 96.61.
According to HDFC Securities analyst Vinay Rajani, persistent foreign institutional investor outflows, rising crude oil prices, and increased safe-haven demand for the dollar amid global geopolitical tensions are the key reasons behind the rupee’s sharp fall.
The rupee has weakened by more than 6 percent since the US-Iran conflict began in late February, pushing crude oil prices above 108 dollars per barrel. The continued weakness of the rupee is increasing pressure on India’s import bill and inflation outlook, especially due to rising energy import costs.
Despite interventions by the RBI and policy measures taken by the central government, there has been limited relief so far in controlling the rupee’s decline.
