Rupee Continues Downtrend for Sixth Consecutive Session Amid Rising Oil Prices

Indian Rupee Extends Losses for Sixth Straight Session

The Indian rupee opened weaker against the dollar on May 15, extending losses for a sixth consecutive session. The weakness in the rupee can be attributed to rising crude oil prices, firm US bond yields, and a broad decline in Asian currencies.

At 9:05 am, the rupee was trading at 95.87 against the dollar, down 0.1 percent from its previous close of 95.77. This decline comes amidst a challenging global economic environment, with various factors contributing to the rupee's weakness.

Earlier, the government raised petrol and diesel prices by Rs 3 per litre in an effort to curb fuel demand after earlier tightening measures targeting precious metal imports. The move is aimed at reducing the demand for fuel and mitigating the impact of rising oil prices on the economy.

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Oil prices remained elevated, with Brent crude trading near $107 a barrel and up around 6 percent for the week. West Texas Intermediate crude traded above $102 a barrel. The persistent disruptions in global energy markets are likely to keep pressure on currencies and inflation expectations globally.

Market participants are closely monitoring the situation in the Strait of Hormuz, which remains effectively closed. The closure has kept global energy markets on edge, with various countries and organizations seeking to resolve the issue.

The impact of geopolitical tensions and supply disruptions can be seen in the robust economic data from the US. The data has kept the 10-year Treasury yield elevated near 4.52 percent. Federal Reserve officials have continued to flag inflation risks, citing stronger-than-expected US inflation data over the last two days.

Asian currencies broadly traded lower, with the South Korean won declining 0.4 percent, the Malaysian ringgit falling 0.35 percent, and the Indonesian rupiah weakening 0.26 percent. The Thai baht declined 0.21 percent, while the Chinese offshore yuan, Singapore dollar, and Japanese yen also traded lower. The Taiwan dollar was an exception, rising 0.13 percent.

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The Bloomberg Dollar Spot Index gained 0.1 percent and was up 0.9 percent for the week. The index's performance reflects the dollar's strength against various currencies, including the Indian rupee.