NEW DELHI, May 19 (ANI): The Indian rupee is expected to remain under pressure in the near term as elevated crude oil prices and sustained foreign fund outflows continue to weigh on the currency, according to market analysts.
Jateen Trivedi, Vice President and Research Analyst for Commodities and Currency at LKP Securities, said the rupee traded sharply weaker due to rising crude prices and persistent foreign capital outflows.
“India’s high dependence on imported crude is worsening sentiment, with Brent crude staying elevated amid ongoing uncertainty around the US-Iran conflict and Strait of Hormuz concerns,” Trivedi said.
The pressure pushed the rupee to a fresh intraday low during the week.
Dilip Parmar, Research Analyst at HDFC Securities, said the rupee extended its losing streak for a third consecutive day, touching an intraday record low of 95.74 amid weakness across Asian currencies.
He attributed the decline to concerns over elevated crude oil prices and their impact on India’s fiscal deficit, along with heightened global risk aversion and continued foreign institutional investor outflows.
Parmar said these factors have made the rupee the worst-performing Asian currency so far this year.
Analysts believe the currency may continue to face volatility unless crude prices ease significantly or foreign capital inflows return.
“The broader trend for the rupee remains weak,” Trivedi said, adding that markets are closely monitoring India’s efforts to secure lower-cost oil and gas supplies to reduce pressure on the import bill and foreign exchange reserves.
Parmar identified key technical levels for traders, stating that spot USD/INR faces resistance at 96.20 and support at 95.30.
According to analysts, a move above 96.20 could push the rupee toward the 97 mark, while holding above 95.30 may help stabilize the currency.
The current macroeconomic environment presents challenges for the Reserve Bank of India, as higher crude prices contribute to inflationary pressures and widen the current account deficit.
Analysts said a sustained recovery in the rupee would likely require Brent crude prices to fall below USD 85 per barrel, a return of foreign institutional inflows, and progress on discounted energy agreements that reduce India’s dollar outflows.
Until then, importers are expected to continue active hedging, while the rupee is likely to remain vulnerable to further geopolitical tensions in West Asia. (ANI)
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