Indian rupee risks more losses after post-RBI policy slide, higher oil adds to woes
MUMBAI: The Indian rupee’s drop after a Reserve Bank of India rate hike and stance change on Wednesday that some economists said was hawkish has left the currency vulnerable to further losses, with higher oil prices adding to pressure. The Indian rupee fell 0.4% on Wednesday to 96.7750 per dollar, its weakest level since mid-May, just 18 paise shy of its all-time low of 96.96. The fall was…
Mumbai witnessed the Indian rupee's decline following a Reserve Bank of India's rate hike and revised stance on Wednesday, which some economists deemed hawkish. The currency plummeted to 96.7750 per dollar, marking its weakest point since mid-May, just 18 paise away from its lowest level ever at 96.96. This sudden drop came as a surprise to many market participants, considering the RBI's seemingly comfortable demeanor in recent days.
The fall is attributed to the catch-up in domestic positioning and hedging following the RBI's policy decision, according to a currency trader at a private sector bank. The 97 per dollar mark will be crucial in the near future, as a breach of this threshold might encourage importers to increase hedging while exporters might delay their actions.
The Reserve Bank of India's decision was labeled as hawkish by Goldman Sachs, who also anticipate a further 25 basis point increase in the repo rate by December. Compounding the rupee's troubles is the surge in oil prices, which has been a significant factor in currency pressure lately. Brent crude prices surged over $2 to exceed $102 a barrel on Thursday due to persistent concerns about supply from the Middle East, aggravated by an increase in attacks on shipping in the Gulf and the Strait of Hormuz.
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