USD Vs INR: Indian Rupee Down 16 Paise To 94.28 As Oil Surge Weighs

 Mumbai, April 24: The rupee fell 16 paise to 94.28 against the dollar extending its slide for the fifth day as the oil spike resulting from the Middle East kept the currency on the boil.

The currency started 10 paise lower at 94.21 before plunging as low as 94.32, buffeted by headwinds from regional unrest between the US and Iran.

Asian currencies marched in lockstep with the rupee, falling anywhere between 0.1% and 0.3% as tensions escalated in the Middle East.

Oil Boils

The slide in the rupee is largely due to oil prices hovering above $100 per barrel after a sharp rise this week.

The rally comes on the back of escalating tensions between Iran and the US, and their spillover effect on the Strait of Hormuz, a critical passageway accounting for a chunk of oil shipments across the globe.

India, which depends heavily on oil imports, could suffer macroeconomic stress as a spike in oil prices may stretch apart the current account gap and spark fears of inflation, both of which bode ill for the rupee. 

Moreover, rising oil prices could also mess up the outlook for growth and monetary policy.

The rupee’s decline has also been exacerbated by a broader risk-off mood in global markets. Heightened uncertainty has boosted demand for the U.S. dollar as a safe-haven asset, pushing the greenback higher and emerging market currencies lower. The dollar is on track for weekly gains amid stalled U.S.-Iran talks and lingering geopolitical risks, further adding to pressure on the rupee. 

Fall Cushioned

Despite the persistent slide, there are signs that the fall could have been steeper. Traders pointed to suspected intervention by the Reserve Bank of India, likely through state-run banks selling dollars, which helped cushion the currency’s losses during the session. 

Meanwhile, domestic financial markets reflected the cautious undertone. Equity benchmarks have come under pressure in recent sessions, while bond yields have inched higher, signalling growing unease among investors about the macroeconomic fallout of rising energy prices. 

Looking ahead, the trajectory of the rupee will remain closely tied to developments in oil markets and the evolving geopolitical situation. Any signs of de-escalation could offer temporary relief, but for now, the currency appears firmly tethered to the volatile mix of rising crude prices and global uncertainty.

In essence, the rupee is not just weakening—it is being slowly pulled into the gravitational field of oil and geopolitics, where every headline has the power to nudge it further off balance.

Source:

• spot rates from https://www.moneycontrol.com/markets/currencies/