Rupee Faces Fresh Trouble: USD/INR Hits All-Time Low of Rs. 95.23 Amid Oil Rally & Fed Uncertainty

Indian rupee slipped to a fresh record low on Thursday, April 30, as the USD/INR pair fell to Rs. 95.2325, slipping by 0.4% decline for the day. The current pressure on the domestic currency eclipsed its previous all-time low of Rs. 95.21 recorded in late March due to global and domestic headwinds.

Recent Trend Shows Persistent Weakness in Rupee

Over the past week, the USD/INR pair has been quite volatile, trading between a high of Rs. 94.73 on April 29 and a low of Rs. 93.57 on April 22. The rupee had briefly shown signs of stability earlier in the month, supported by central bank measures to curb speculation. However, those gains have now been largely erased.

On a broader scale, the rupee has weakened by 0.59% over the past month and has depreciated sharply by 12.17% over the last 12 months. The ongoing trend suggests sustained pressure, with the currency now heading towards its third consecutive weekly decline.

Strong Dollar and Fed Signals Weigh on Rupee

One of the key factors behind the rupee's fall is the renewed strength in the US dollar. Recent hawkish signals from Federal Reserve policymakers have lifted US bond yields, making dollar-denominated assets more attractive to global investors.

Although the Federal Reserve kept interest rates unchanged in its latest meeting, the decision was notably divided the most since 1992.

This has increased pressure on emerging market currencies like the rupee, as capital tends to flow toward higher-yielding US assets.

Rising Crude Oil Price

Another major factor weakening the rupee is the sharp rise in crude oil prices. Reports suggesting that the US may continue restricting Iranian oil exports have tightened global supply expectations. As a result, Brent crude has surged to around $111 per barrel, with some estimates pointing even higher.

For India, which is heavily dependent on oil imports, rising crude prices directly impact the trade deficit and increase dollar demand. This puts additional downward pressure on the rupee.

Outlook For Rupee

The Reserve Bank of India (RBI) has been actively intervening in the forex market by selling dollars intermittently to limit volatility. However, the central bank's approach appears to be focused on smoothing sharp movements rather than defending a specific level.

According to Trading Economics, "The currency is now heading toward its third straight weekly loss despite central bank efforts to curb speculation. Looking ahead, stabilizing the rupee may become more difficult. Analysts pointed out that the challenge is no longer just speculative pressure but a broader shortfall in capital inflows. Projections now suggest a gap of around $40 billion to $50 billion for the current fiscal year, significantly wider than in recent years."

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