Rupee
Rupee crashes to record low of 96.85 against US dollar amid West Asia crisis
Mumbai/IBNS: Rupee on Wednesday hit a fresh low as the global tension over the West Asia crisis persisted, media reports said.
The Indian currency slumped to an all-time low of 96.85 per US dollar during trading.
Rupee touched 96 per US dollar last Friday.
The Indian rupee has come under intense pressure amid the escalating West Asia conflict, with the currency falling to record lows against the US dollar in recent sessions.
Analysts say rising crude oil prices, foreign investor outflows and global uncertainty are the key reasons behind the sharp weakening.
Why is the rupee weakening?
Rising crude oil prices
India imports a major portion of its crude oil from West Asia. As tensions in the region intensified, global oil prices surged sharply, increasing India’s import bill and demand for dollars.
Higher oil prices generally weaken the rupee because India has to spend more foreign currency on energy imports.
Flight to the US dollar
During geopolitical crises, global investors usually move money toward safer assets such as the US dollar and US Treasury bonds. This has strengthened the dollar globally while putting pressure on emerging market currencies like the rupee.
Foreign investor outflows
Foreign institutional investors have pulled billions of dollars from Indian equities and bonds amid global uncertainty.
The outflows have increased demand for dollars and weakened the rupee further.
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