The Indian rupee faced a major setback on Tuesday as it crossed 96 against the dollar. The currency dropped to 96.1450 per dollar during trading hours.
Moreover, the rupee recorded nearly 0.2 percent decline during the session. This marked its weakest position in the last two months.
The fall came amid changing global conditions and rising pressure on investors. India imports a large share of its energy needs from overseas markets.
Therefore, a weaker rupee increases the cost of imports for the country. The latest decline reflects growing pressure from international developments.
Crude Oil Surge Adds More Pressure On Rupee
Meanwhile, crude oil emerged as the biggest factor behind the currency decline. Brent crude prices increased more than 1.5 percent in global markets.
Consequently, oil prices crossed the $107 per barrel level. Rising tensions in the Middle East created fresh concerns among global markets.
The ongoing US-Iran conflict has increased worries about energy supply disruptions. Earlier expectations of stable crude exports from the region have weakened.
However, tense conditions have affected those hopes. Investors now remain cautious due to uncertainty in energy markets.
Foreign Investors Pull Billions From Indian Markets
Furthermore, the impact has reached currency, stock, and bond markets. Foreign investors have shown concern and started withdrawing funds.
During September alone, foreign investors removed $3.7 billion from Indian markets. This large dollar outflow increased pressure on the rupee.
As dollar demand rises, the Indian currency faces additional weakness. The market sentiment has also suffered due to heavy selling.
Additionally, expensive oil can increase India’s import bill. This pressure may affect inflation through higher transportation and production costs.
The rupee crossing 96 highlights the impact of global market challenges. If US-Iran tensions continue, crude prices may create further pressure.
