The Indian rupee weakened further on Thursday as rising crude oil prices and ongoing geopolitical tensions in the Middle East heightened concerns over import costs and external finances, prompting central bank interventions amidst persistent pressure.
India’s rupee slipped again on Thursday as a jump in crude prices revived concerns over the country’s import costs and external finances. The currency traded near 95.33 to the US dollar in early dealings, after ending Wednesday around 95.08, according to market reports from New Delhi. The move came as Brent crude held above $100 a barrel amid fresh geopolitical tension in the Middle East.
The latest weakness underlines how exposed India remains to swings in global oil markets. As one of the world’s biggest crude importers, India must buy large quantities of dollars to pay for energy, and that demand tends to rise when oil becomes more expensive. Analysts say sustained crude prices above $100 could widen the current-account deficit, add to inflation pressures and deepen strain on the rupee.
Reuters reported that the Reserve Bank of India has been active in the foreign-exchange market, with state-run banks selling dollars on its behalf to curb disorderly moves. It also said the central bank carried out dollar-rupee sell/buy swaps for a second straight session, a tactic that helps manage rupee liquidity while influencing forward pricing. Even so, traders expect intervention to slow losses rather than remove the underlying pressure created by stronger oil demand for dollars.
The rupee’s move above the 95 mark also carries psychological weight. Business Standard reported earlier in the year that the currency touched record lows as crude prices, foreign portfolio outflows and domestic dollar demand piled up, while the central bank stepped in intermittently through state banks. For now, investors are watching both oil and Middle East developments closely, because a prolonged supply shock could keep the rupee under pressure and raise costs for import-heavy industries at home.
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