The rupee opened at a new record low for the second straight session on Monday after having breached the 82-per-dollar mark for the first time ever on Friday, hurt by crude prices near $100 a barrel and as strong US jobs data pointed to an aggressive rate hike path.
Bloomberg showed the rupee was last changing hands at 82.6650 per dollar after opening at a record low of 82.6725 and hitting its weakest level of 82.6950 during early trade on Monday, compared to Friday’s close of 82.33.
The rupee has lost over 10 per cent of its value this year and hit its previous all-time low of 82.4275 to the dollar on Friday, despite the Reserve Bank of India continuing to sell foreign exchange reserves to support the rupee.
In recent sessions, the rupee has repeatedly hit record lows due to worries about rising oil prices and Treasury yields, corporate outflows, and demand for the dollar.
While the RBI has spent nearly $100 billion from the country’s forex reserves since Russia invaded Ukraine late in February, the central bank has been unable to stem the rupee’s decline, unlike in previous instances.
For about 50 days, the RBI had previously managed to keep the rupee from breaching 80 per dollar.
“The double whammy of higher US rates and higher crude prices is back to haunt the rupee,” said IFA Global Research Academy.
“While the RBI was able to defend the rupee successfully through the last round of simultaneous stress on current and capital account by spending its reserves, this time around things are likely to be different.”
Oil took a breather and eased off its 5-week highs on Monday, but Brent crude neared $100 a barrel.
Analysts have increased their predictions for oil prices and now anticipate Brent to surpass $100 per barrel in the coming months.
Given that India imports more than 80 per cent of its oil needs, the country’s inflation problems and growing current account deficit (CAD) will be exacerbated by the rise in crude prices.