Indian Rupee Dips 11 Paise Against Dollar Amid Crude Price Increase

Indian Rupee Falls to New Record Lows Amid Global Economic Pressures

The Indian rupee has opened 11 paise lower on May 15, as elevated Brent crude prices continue to exert pressure on the currency, while rising US treasury yields keep a check on the rupee's value.

The rupee is currently trading at Rs 95.87 per dollar, a decline from the previous trading session's value of Rs 95.76. The rupee briefly fell as low as Rs 95.95 per dollar, nearing the psychologically significant Rs 96 per dollar mark before recovering some of its losses.

Investor sentiment on riskier assets has been impacted by the prolonged deadlock between the United States and Iran, which has resulted in the closure of the Strait of Hormuz. As a result, Brent crude prices are currently trading at near $107 per barrel. Additionally, capital flight from Indian equities and debt has weakened the sentiment for the Indian currency.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

As a consequence, the rupee has lost more than 1 percent this week, and has breached new record lows. India's reliance on imported energy, with nearly 85 percent of its energy needs coming from abroad, exacerbates the impact of higher Brent crude prices. These higher prices increase the country's import bill and widen the current account deficit, ultimately putting pressure on the rupee.

Market participants are awaiting key outcomes from the meeting between US President Donald Trump and Chinese Premier Xi Jinping.

Back home, the Indian government has hiked petrol and diesel prices by Rs. 3 per litre in an effort to curb demand for these fuels, following a move to act on precious metals.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline