Rupee Touches One-Year Low Amid Concerns Over Oil Prices

The Indian rupee declined to 83.28 against the U.S. dollar on Monday, marking its lowest level in one year against the greenback. The rupee's fall comes amid soaring concerns about oil prices and as investors wait to see if the ongoing conflict in the Middle East draws in other countries, according to a Reuters report.

The Reserve Bank of India has been intervening routinely to prevent the rupee from sliding to its lifetime low and likely sold U.S. dollars earlier in the session, added the Reuters report.

Earlier, rupee jumped by 6 paise to 83.24 against the US dollar in early morning trade on September 16 supported by positive macro-economic data.

According to Kotak Institutional Equities weekly outlook report, "INR continues the range-trade. Last week, the INR opened flat and gained ground mid-week from a weaker DXY index. The DXY index fell to sub-106 levels for the first time in two weeks to 105.5 prior to the release of the September US CPI inflation print. The upside surprise in inflation caused the DXY index to rise back above 106 levels and the end the week higher by 0.6% w-o-w."

Further, crude oil prices increased towards the end of the week (higher by 6.1% on a w-o-w basis). Tracking these cues, the INR appreciated to a near-two week high of 83.13 before rising crude oil prices and strengthening USD pulled it lower to close near 83.26. Overall, INR traded in a narrow band with RBI intervention having capped sharp moves on either side. We continue to expect USD-INR to trade in the range of 82.75-83.50 in the near term, added Kotak Institutional Equities.

Forex traders said falling domestic inflation, rise in industrial production figures and improvement in trade deficit aided the local unit. However, geopolitical tensions, particularly the Israel-Hamas conflict, dented investor sentiments, according to a PTI report.

At the interbank foreign exchange, rupee opened at 83.25 against the dollar and then hit an early high of 83.24, registering a gain of 6 paise against its previous close. Earlier on Friday, the rupee slipped 6 paise to settle at 83.30 against the US Dollar.