The Indian rupee came under pressure on Thursday following increasing tension in the Middle East and attacks on oil facilities. During trading, the rupee reached its lowest level ever against the dollar. However, after some softening in oil prices at the end of the day, the rupee recovered some losses.
Rupee reaches record low during the day
During trading, the rupee at one time fell to 92.3575 against the dollar, which is the lowest level till date. Later, when there was some stability in the market, the fall of rupee reduced and it closed at 92.19 per dollar. This shows a decline of about 0.16% compared to the previous trading session.
Experts believe that if the fall in rupee increases further, the Reserve Bank of India may intervene in the market, so that the sharp decline of the currency can be stopped.
Pressure increased due to rise in oil prices
Due to increasing geopolitical tension in the Middle East, the global oil market also witnessed huge fluctuations. The price of international benchmark Brent Crude at one time reached $ 101.6 per barrel. However, later it was seen trading around $96.87 per barrel.
This rise is mainly due to the increasing tension between the United States, Israel and Iran. The impact of this conflict has spread throughout the Middle East region, increasing concerns about oil supply.
Effect visible in global markets also
The rise in oil prices and geopolitical tensions have also affected global stock markets. A decline of about 1% was recorded in Asian stock markets. India’s main stock market index Nifty 50 was also seen trading with almost the same decline. There was pressure in European markets too, while American markets also showed signs of a weak start.
More impact on currency of energy importing countries
Experts say that such a situation has a greater impact on the currencies of countries whose economy is more dependent on oil imports. India is also among the world’s largest energy importers. This is the reason why the rupee has fallen by more than 1% against the dollar since the start of the war.
According to analysts at ANZ Bank, if the average price of crude oil remains around $ 80 per barrel, then it may become more difficult to manage India’s current account deficit. Due to this, fluctuations in rupee may also increase.
Fear of impact on inflation and economic growth
Economists say that if oil prices remain around $ 100 per barrel for a long time, it may affect both India’s economic growth and inflation. This may also increase the risk of increasing inflation and slowing down the growth rate.
According to market experts, currently energy prices will play the most important role in deciding the direction of India’s foreign exchange market. Meanwhile, the market’s eyes are also fixed on India’s inflation data for the month of February, which may give an indication of the future economic situation.