Indian Rupee extends its downward streak as oil prices keep rising

The Indian Rupee continues its downward trend against the US Dollar for the third consecutive trading day on Thursday, with the USD/INR pair reaching a fresh 10-day high of 95.31. The ongoing rise in oil prices is exerting pressure on the Indian currency, which is heavily reliant on oil imports. The MCX Crude Oil contract for September 21 expires at a higher price, closer to its three-month peak of Rs.

9,189. Economic experts suggest that rising oil prices, fueled by geopolitical conflict, contribute to the currency's decline. The Reserve Bank of India (RBI) has been intervening in the foreign exchange markets to maintain stability but has not provided substantial relief. Foreign inflows, particularly through the FCNR (B) window, bolster the RBI's capacity to manage currency volatility.

The upcoming US Consumer Price Index (CPI) data for August will likely confirm contained underlying price pressures, with core inflation rising by 0.19% month-over-month (2.3% year-over-year). In the short term, USD/INR is trading near the 20-period exponential moving average at 95.14, indicating a neutral bias. The pair is expected to find crucial support near 94.15 and resistance near 96.00 levels.