Indian rupee sees sharpest weekly drop in four months on oil worries

The Indian rupee experienced its steepest weekly decline in four months due to concerns over oil prices, according to wire material. On Friday, the currency dropped over 1% week-on-week, marking its fourth consecutive day of weakening. Its value ended at 95.55 per dollar, a decline of 0.1% from the previous trading session. Throughout the week, the rupee saw a 1.1% drop, marking the steepest fall since mid-May when it had hit an all-time low of 96.96 following surging oil prices.

The sharp rise in oil prices had pushed the rupee to record lows earlier in September, but it regained some ground this week as fears eased over Middle East shipping through the Strait of Hormuz. However, oil prices ended the week above $100 a barrel for the first time since mid-May, which continued to weigh on the rupee. RBI Governor Sanjay Malhotra indicated that the central bank might intervene to manage liquidity and keep the overnight rate in check.

The RBI is prepared to use various tools, including dollar sales and foreign exchange swaps, to support forex markets. Traders noted that the central bank conducted dollar-rupee sell/buy swaps on Friday for the third consecutive day. As markets turned their attention to upcoming U.S. consumer inflation data due later on Friday, forecasts centered on a 0.2% monthly rise in the core measure of CPI.

However, there were concerns that the actual number could be higher. ING suggested that the bar was not high for today's CPI to endorse a Fed rate hike next week.