Rupee slides to record low, crosses 96 vs USD for the first time
The Indian rupee fell to an all-time low on Friday, as oil prices neared $110 per barrel, deepening challenges for India's external sector, which have started to reflect in economic indicators.
The rupee fell 0.3% to 96.05 per U.S. dollar, eclipsing its previous all-time low of 95.9575 in the previous session.
Brent oil prices gained more than 1% to $107 per barrel after U.S. President Donald Trump said he would not be "much more patient" with Iran.
The more than five-week ceasefire between the U.S. and Iran remains fragile, with neither side appearing close to a deal to end the war.
Pressure from elevated oil prices was compounded by higher U.S. bond yields on Friday. The 10-year U.S. bond yield rose to 4.53%, its highest in a year, as concerns over energy-driven inflation fuelled bets of a Federal Reserve rate hike this year.
Earlier on Friday, India raised petrol and diesel prices for the first time in four years by more than 3%, becoming one of the last major economies to hike retail fuel prices.
Indian interest rate swap markets are currently pricing in about 90 bps worth of rate hikes over the next 12 months.
"Having implemented measures to contain non-essential consumption to limit import bill and conserve foreign exchange, we expect policymakers to continue with these measures and additionally announce steps to encourage foreign capital inflows," economists at Barclays said in a note. The firm expects the RBI to keep rates unchanged over 2026.
Multiple media reports in recent days outlining possible steps to boost dollar inflows have provided momentary relief to the rupee, even as the underlying trend of weak dollar inflows keeps the depreciation trend intact.
Investors are also awaiting India's merchandise trade data for April due to be released later on Friday.
The rupee fell 0.3% to 96.05 per U.S. dollar, eclipsing its previous all-time low of 95.9575 in the previous session.
Brent oil prices gained more than 1% to $107 per barrel after U.S. President Donald Trump said he would not be "much more patient" with Iran.
The more than five-week ceasefire between the U.S. and Iran remains fragile, with neither side appearing close to a deal to end the war.
Pressure from elevated oil prices was compounded by higher U.S. bond yields on Friday. The 10-year U.S. bond yield rose to 4.53%, its highest in a year, as concerns over energy-driven inflation fuelled bets of a Federal Reserve rate hike this year.
Earlier on Friday, India raised petrol and diesel prices for the first time in four years by more than 3%, becoming one of the last major economies to hike retail fuel prices.
Indian interest rate swap markets are currently pricing in about 90 bps worth of rate hikes over the next 12 months.
"Having implemented measures to contain non-essential consumption to limit import bill and conserve foreign exchange, we expect policymakers to continue with these measures and additionally announce steps to encourage foreign capital inflows," economists at Barclays said in a note. The firm expects the RBI to keep rates unchanged over 2026.
Multiple media reports in recent days outlining possible steps to boost dollar inflows have provided momentary relief to the rupee, even as the underlying trend of weak dollar inflows keeps the depreciation trend intact.
Investors are also awaiting India's merchandise trade data for April due to be released later on Friday.
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