Rupee Drops 32 Paise After Weak Open as Oil Surge, Dollar Strength Bite

Mumbai, April 22:The rupee crashed 32 paise against the dollar on Wednesday, trading at 93.82 to the greenback and extending its losses as boiling crude and rising dollar squeezed sentiment.

The comes after a meltdown at the opening of the trade itself, with the local unit starting 20 paise lower before continuing its slide through the day,the move mirroring mounting concerns around higher oil prices driving up demand for dollars from importers.

Brent crude has been creeping closer to the $100-per-barrel mark, keeping traders cautious despite a temporary extension of the US-Iran ceasefire.

Rising crude prices put India in a spot as the oil-import dependent economy sees its trade deficit widening and rupee sliding beyond comfort. Moreover, oil marketing companies remaining active buyers of dollars adds to the rupee’s slide versus the greenback.

Asia Weakens

Adding to the pressure is the broader strength in the US dollar, which has held firm amid global uncertainty. A stronger dollar tends to pull capital away from emerging markets, weakening currencies like the rupee. The local unit has also been tracking weakness in other Asian peers, many of which have come under pressure due to their sensitivity to rising energy costs.

Market participants pointed out that even regulatory tweaks by the Reserve Bank of India have done little to stabilise sentiment in the near term. Traders remain cautious after the central bank partially relaxed curbs on the offshore non-deliverable forwards (NDF) market, a move aimed at improving liquidity but which has also added to near-term volatility.

Near Lows

Intraday, the rupee hovered near its lows, indicating sustained demand for the dollar and a lack of strong supportive triggers. Analysts believe that unless crude prices cool meaningfully or geopolitical tensions ease, the rupee is likely to remain under pressure.

There is also growing expectation of possible intervention by the Reserve Bank of India to curb excessive volatility, especially as the currency nears its recent lows. However, such interventions are typically aimed at smoothing sharp moves rather than reversing the broader trend.

In the near term, the rupee is expected to trade with a weakening bias, with key levels seen approaching the 94 mark if external pressures persist.

Overall, the currency’s move underscores a familiar vulnerability—the rupee remains highly sensitive to oil prices and global risk sentiment, and with both factors currently tilted against it, the path of least resistance appears to be on the downside.

Source:

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