Rupee falls 25 paise to 95.33 against US dollar on high crude prices

In early trade on Thursday, the Indian rupee declined by 25 paise to 95.33 against the US dollar due to rising crude oil prices and rising demand for the US currency.

The fall came as Brent crude prices stayed above $100 a barrel on account of rising tensions in the Middle East, stoking concerns about India’s import bill and inflation. India is a big crude importer and the rupee is especially sensitive to global oil price movements.

The rupee settled at about 95.10 to the dollar on Wednesday, after breaching the key 95-per-dollar level for the first time in recent trading. Reuters reported that the Reserve Bank of India was likely to be supporting the currency through sales of dollars and foreign-exchange swaps.

The currency has also come under pressure from increased dollar demand due to derivative maturities and corporate hedging, Reuters reported.

Brent crude climbed above $100 a barrel this week as the United States and Iran conflict disrupted oil shipments through the Strait of Hormuz. The benchmark traded above $101 a barrel Thursday.

The rupee’s weakness adds to pressure on India’s import costs and could complicate the outlook for inflation if oil prices stay high.