Rupee Hits Fresh Record Low, Opens 21 Paise Weaker at 96.17 Against US Dollar

Indian Rupee Hits Fresh All-Time Low Amid Ongoing Geopolitical Tensions

The Indian rupee opened 21 paise lower on May 18 to a fresh all-time low, as oil prices traded above $110 per barrel and fresh geopolitical tensions in West Asia signaled a deterioration in the situation, denting investor appetite.

The local currency was trading at Rs 96.17 per dollar, as compared to Rs 95.96 per dollar in the previous trading session. The rupee breached the psychological level of Rs 96 per dollar for the first time on Friday, marking a new low in its value.

Oil Prices Surge Amid Geopolitical Unrest

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Brent crude prices jumped more than 1 percent overnight to trade at $111 per barrel, after a nuclear plant in the United Arab Emirates (UAE) was attacked, and further efforts to come up with a peace deal with the United States and Iran came under jeopardy. Additionally, there was no notable outcome in the meeting between US President Donald Trump and Chinese Premier Xi Jinping.

Emerging Market Assets Under Pressure

A rise in the US dollar following strong economic data from the US has dented sentiment for emerging market assets, including the rupee. The rupee has already been under pressure from stubbornly high oil prices and outflows from foreign investors.

Outlook for the Rupee

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

The rupee's value is expected to remain under pressure as long as the current geopolitical tensions persist. High Brent crude prices increase the country's import bill and widen the current account deficit. The Reserve Bank of India (RBI) may need to announce schemes to increase dollar inflows into the country to stabilize the rupee.

| Comparison of Rupee Value | | --- | --- | | May 18, 2024 | Rs 96.17 per dollar | | Previous trading session | Rs 95.96 per dollar | | Friday (new low) | Rs 96 per dollar |