Rupee Plunges To 12-Month Low Against Dollar

MUMBAI, (IANS) – The Indian rupee plunged to a 12-month low of 83.28 against the US dollar on October 16 amid rising oil prices and uncertainty in global markets due to the ongoing Israel-Hamas war.

The RBI has been intervening periodically to sell dollars in the market to prevent the rupee from going into a free fall, according to traders.

The benchmark Brent crude was hovering at close to $91 a barrel after having jumped nearly 6 percent on October 13.

Oil prices soared nearly 30 percent in the three months to September, the biggest third-quarter gain in almost two decades.

With rising crude oil prices in the international market pushing up the demand for dollars, the Indian rupee has slumped to record lows below 83 against the US greenback.

India’s current account deficit (CAD) jumped seven-fold to $9.2 billion in the April-June quarter compared to the corresponding figure of $1.3 billion in the preceding quarter, according to the latest RBI data released last week.

The continuing surge in oil prices and slowing exports due to a decline in demand in global markets, which is expected to widen further, will bring the rupee under further pressure.

CAD for the April-June quarter of 2023-24 was 1.1 percent of the GDP.

According to Emkay Global Financial Services lead economist Madhavi Arora, the July-September quarter will see a “substantial widening of CAD” to 2.4 percent of the GDP on account of higher oil prices, higher core imports, and further slowing of services exports.