New India: The Indian rupee hit a record low of 96.20 against the US dollar on Monday, weakening 0.2% from its previous close. The rupee has fallen by approximately 5.5% since the Iran war began.
Last week, the rupee also crossed the 96-dollar mark for the first time, reaching an intraday low of 96.14.
Impact of rising crude oil prices
Rising crude oil prices are believed to be a major reason for the rupee’s decline. Following reports of an attack on a nuclear power plant in the United Arab Emirates, Brent crude prices rose to around $111 per barrel.
Reports that US President Donald Trump is discussing possible military options against Iran have also increased concerns in global markets.
Stock Markets Also Seen a Sharp Fall
Weak global cues also impacted the Indian stock market. The Nifty50 opened more than 1% lower at 23,396.45 in early trade, while the Sensex fell more than 800 points to 74,430.35.
Experts say the rupee’s weakness could increase India’s import bill, potentially putting pressure on inflation and economic growth.
RBI Active to Control the Rupee
The government and the Reserve Bank of India (RBI) have taken several steps to stem the rupee’s decline. The government has banned most silver imports, while the RBI has also tightened foreign exchange regulations for banks, intervening in the currency market.
Experts believe the rupee may remain under pressure in the coming days, and its movement will largely depend on RBI intervention.