The Indian rupee was hit by crude oil prices rising above $110 per barrel in international markets and conflict in West Asia. As the market opened on Monday, the rupee fell to a record low. The rupee fell to 96.20 against the dollar. Later, it fell further to 96.25, the lowest level for the Indian currency.
The rupee was trading at Rs 95.96 against the dollar in the previous session. The currency fell below 96 for the first time on Friday. The Indian rupee has been the worst performing currency in Asia since the Iran-US-Israel war that started on February 28 last year. The rupee depreciated by around 5.5 per cent during this period. The total decline since the beginning of this year is more than 7 percent.
According to market sources, the Reserve Bank of India (RBI) intervened in the market on Friday to prevent the fall of the rupee. Experts say this is a temporary relief, but high crude oil prices have forced the central bank to tap into the market more frequently.
Meanwhile, the US 10-year Treasury yield rose to 4.625 percent. Rising oil prices have raised inflation risks and increased selling pressure on Treasury bonds. Bond yields also rose in Europe, the UK and Japan.
Analysts say the Iran-US war, unrest in the Strait of Hormuz and uncertainty over global energy supplies have put direct pressure on the Indian forex market.
The rupee fell to a record low on Monday, leading to sharp declines in domestic stock markets. The Sensex fell nearly 950 points after the market opened. By 10.50 am after a little settling down:
Sensex: 74,592.99 (down 645 points or 0.86%)
Nifty: 23,437.20 (down 206.30 points or 0.87%)
Bank Nifty also fell sharply.
According to experts, although geopolitical instability is unlikely to abate soon, the Government of India and the RBI have taken proactive steps to address the situation.
