The rupee extended its losing streak for the seventh straight session, weakening to a record low of 96.38 against the US dollar amid elevated crude oil prices, rising US Treasury yields and continuing global uncertainty.
The rupee opened nearly 18 paise weaker on Tuesday at 96.38 per dollar, matching the lifetime low touched in the previous session. On Monday, the currency had settled at 96.3450 after hitting an intraday record low of 96.3875.
Market participants said the rupee remained under pressure due to surging US bond yields, higher crude prices and concerns over global geopolitical tensions. Traders also indicated that the Reserve Bank of India may have intervened in the market by selling dollars to limit the rupee’s fall.
The dollar index, which measures the greenback against a basket of six major currencies, was trading 0.09 percent lower at 99.10.
According to Devarsh Vakil of HDFC Securities, the rupee has emerged as one of Asia’s weakest-performing currencies this year.
He said the sharp depreciation was mainly driven by rising US Treasury yields and elevated crude oil prices, which have intensified concerns over India’s balance of payments position and imported inflation.
Brent crude was hovering near $109.80 a barrel on Tuesday, keeping pressure on oil-importing economies such as India.
Reflecting the rise in global crude prices, petrol and diesel prices in India were increased by around 90 paise per litre on Tuesday. This marks the second fuel price hike within a week, following a ₹3 per litre increase announced last Friday.
Analysts expect further increases in fuel prices in the coming months.
IDFC FIRST Bank said oil marketing companies continue to face under-recoveries and further revisions in retail fuel prices are likely. The bank expects cumulative petrol and diesel price hikes of up to 10 percent over the next few months, including Tuesday’s increase.
Currency markets are also closely monitoring developments in the conflict involving Iran and the possibility of reopening the Strait of Hormuz.
According to Reuters, US President Donald Trump said a planned attack on Iran had been paused to allow room for negotiations, offering some relief to global markets.
