Rupee hits all-time low at 76.92 vs dollar on sharp surge in oil prices

A file photo of RBI building.

New Delhi: The rupee hit a historic low of 76.96 against the US dollar on Monday, after crude oil prices hit their highest levels in 14 years as concerns about the Russia-Ukraine war rattled the financial markets.

The rupee slid below the COVID era-low of 76.90- struck in April 2020- during the session, before finishing the day at the new all-time low.

Heightened geopolitical uncertainty damaged investors’ appetite for risk globally, causing a sell-off across equities. Indian equity benchmarks tanked more than three percent each amid deep cuts across most sectors barring metals, which rose along with other commodities.

The greenback and US bond yields surged as higher oil rates fuelled worries about a worse-than-expected acceleration in inflation and its impact on key interest rates.

Weakness in the rupee is likely to make imports more expensive for India, which meets more than two-thirds of its oil requirement through imports.

The depreciation in the rupee may widen India’s twin deficits: the current account deficit and the trade deficit.

“With every $10 rise in crude price, there is a considerable negative impact on our current account deficit, and inflation is estimated to rise by 24 bps,” Sugandha Sachdeva, VP-Commodity and Currency Research at Religare Broking, told

“The Indian rupee is reeling under the triple whammy of overheated oil prices, panic selling by the FPIs and the strength in the dollar index. Rising crude oil prices in international markets amid the intensifying geopolitical crisis are likely to push up domestic inflation and widen the current account deficit. It’s not just about crude, heavy selling by the FPI’s in domestic equity markets has also been a key culprit for the rupee weakness,” she was quoted as saying.

Sachdeva expects the rupee to continue in negative territory and test the 77.50 level against the US currency in the near term.


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