The Indian rupee has been under significant pressure, hovering near its all-time low as concerns grow over foreign outflows and rising oil prices. These two key factors have played a major role in the rupee’s current state, with foreign investors pulling out billions from Indian equities in just a few days. The focus key phrase Indian rupee near all-time low highlights the gravity of the situation.
The 1-month non-deliverable forward indicated that the rupee would open at 83.97-83.98 per U.S. dollar, which is almost the same as the 83.9850 lifetime low reached last month. Despite the rupee's vulnerability to foreign equity withdrawals and surging oil prices, the Reserve Bank of India (RBI) has intervened to prevent the rupee from sliding further.
Another factor contributing to the Indian rupee near all-time low is the steep rise in oil prices due to the ongoing conflict in the Middle East. Brent crude surged by 5% this week, intensifying concerns over a potential oil supply disruption, which accounts for about one-third of the global supply. The price increase has had a domino effect on global currencies, including the Indian rupee.
As oil prices climb, India, being one of the largest oil importers, feels the pressure, causing additional stress on the currency. This has led to discussions around potential supply cuts in the region, further weakening the rupee’s standing in the global market.
Foreign investors have been pulling out substantial amounts of capital from Indian equities, further intensifying the pressure on the rupee. On Thursday alone, foreign investors withdrew approximately $1.8 billion, and the total withdrawal has surpassed $3 billion in just three sessions. Such a rapid exit from the Indian stock market, combined with rising oil prices, is expected to keep the Indian rupee near all-time low in the near future.
In response to these events, the RBI has been actively managing the rupee to ensure it does not fall drastically. However, with persistent foreign outflows and uncertainties in the oil market, the Indian currency remains vulnerable.
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The Indian rupee is hovering near its all-time low due to foreign investor outflows and rising oil prices. Learn the impacts on the rupee.
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