Rupee Weakens Further as Crude Rally Pressures Sentiment, opens 10 paise lower

The rupee opened 10 paise lower at ₹86.18 against the US dollar on Monday, continuing its losing streak amid a sharp rebound in international crude oil prices. This marks the second consecutive session of weakness for the domestic currency, underscoring sustained pressure from external macroeconomic developments.

On Friday, the rupee had settled at ₹86.08 per dollar. The latest slide comes as Brent crude futures surged past the $73 per-barrel mark, currently trading at $74.78 raising concerns about India's import bill and the wider impact on the country's current account dynamics.

Crude spike renews import cost concerns

India imports nearly 85% of its crude oil requirement, making the rupee highly sensitive to global oil price fluctuations. The recent upward momentum in oil markets, triggered by tightening supply dynamics and geopolitical risks, has reignited concerns about rising inflation and deteriorating trade balances for large importers like India.

A weaker rupee directly increases the cost of dollar-denominated imports, especially oil, which could potentially spill over into domestic fuel prices and input costs for key industries.

Dollar strength and Fed cues weigh on sentiment

In addition to oil market pressures, the US dollar remained firm against a basket of major currencies, supported by hawkish signals from the US Federal Reserve. Market participants are closely watching for cues from upcoming US inflation data and Fed commentary, which could influence the trajectory of global interest rates and foreign fund flows.

With elevated US yields and cautious risk sentiment, foreign portfolio investment into Indian assets may moderate, further adding to pressure on the rupee.

RBI watch: Intervention and reserves as buffers

The Reserve Bank of India (RBI) has so far maintained a calibrated approach in managing exchange rate volatility, leveraging its robust foreign exchange reserves-currently above $650 billion. Analysts expect the central bank to step in if rupee depreciation threatens to destabilise inflation expectations or financial markets.

However, intervention may be measured to preserve reserves and allow market forces to guide the rupee in line with fundamentals.

Outlook: Eyes on Crude oil and US data

Traders and investors are likely to remain cautious ahead of key macroeconomic triggers, including global crude inventory reports, US economic indicators, and India’s balance of payments data. Sustained pressure from oil and a resilient dollar may cap any meaningful recovery in the rupee in the near term.

Currency strategists forecast a potential trading range of ₹85.90-₹86.40 in the short run, with the bias tilted towards further weakness if external headwinds persist.

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