The Crossbill News Desk
The Indian rupee came under renewed pressure at the start of the week, logging its sharpest single-day decline in a month amid global uncertainty and rising geopolitical tensions.
On March 2, the currency slipped 0.5% to close at 91.47 against the US dollar, marking its weakest level in four weeks as volatility gripped financial markets.
According to Reuters, “the cost of hedging against further depreciation against the dollar rose.” In another report, Reuters added that the Reserve Bank of India likely intervened in the currency market, citing traders who spoke to the news agency.
Moneycontrol noted that the latest movement has turned attention to the Reserve Bank of India’s forex reserves, “which have seen swings throughout the month.” It further reported that the central bank is expected to try and “safeguard the psychological Rs 92 per dollar level.”
Escalating military tensions in West Asia have unsettled global markets, intensifying risk aversion among investors. The rupee’s decline comes as foreign portfolio investors continue to pull money out of Indian equities, while higher crude oil prices threaten to widen the country’s trade deficit.
The focus, a trader at a large foreign bank told Reuters, was on “just managing risk and not taking any additional exposures,”, considering as well that March 4 (Wednesday) is a holiday for Holi, that will keep financial markets in India shut.
A PTI report predicted that reasoned that additional strain could emerge from rising energy costs, noting that “India faces the risk of a sharp increase in its import bill with the rising crude prices in the international market, as the country’s 85% fuel requirement is met through imports.”
In recent months, the rupee has been dubbed “Asia’s worst performing currency,” weighed down by trade and tariff headwinds as well as sustained foreign investor outflows.
The ongoing conflict in West Asia has further amplified global uncertainty, leaving emerging market currencies, including the rupee, exposed to heightened volatility.
Recent data released by the RBI on February 27 showed that “India’s forex reserve dropped by $2.119 billion to $723.608 billion during the week ended February 20. The overall reserves had jumped by $8.663 billion to an all-time high of $725.727 billion in the previous reporting week.”
The fluctuations in reserves are now being closely watched as policymakers navigate a fragile external environment.
On March 2, the currency slipped 0.5% to close at 91.47 against the US dollar, marking its weakest level in four weeks as volatility gripped financial markets.
According to Reuters, “the cost of hedging against further depreciation against the dollar rose.” In another report, Reuters added that the Reserve Bank of India likely intervened in the currency market, citing traders who spoke to the news agency.
Moneycontrol noted that the latest movement has turned attention to the Reserve Bank of India’s forex reserves, “which have seen swings throughout the month.” It further reported that the central bank is expected to try and “safeguard the psychological Rs 92 per dollar level.”
Escalating military tensions in West Asia have unsettled global markets, intensifying risk aversion among investors. The rupee’s decline comes as foreign portfolio investors continue to pull money out of Indian equities, while higher crude oil prices threaten to widen the country’s trade deficit.
The focus, a trader at a large foreign bank told Reuters, was on “just managing risk and not taking any additional exposures,”, considering as well that March 4 (Wednesday) is a holiday for Holi, that will keep financial markets in India shut.
A PTI report predicted that reasoned that additional strain could emerge from rising energy costs, noting that “India faces the risk of a sharp increase in its import bill with the rising crude prices in the international market, as the country’s 85% fuel requirement is met through imports.”
In recent months, the rupee has been dubbed “Asia’s worst performing currency,” weighed down by trade and tariff headwinds as well as sustained foreign investor outflows.
The ongoing conflict in West Asia has further amplified global uncertainty, leaving emerging market currencies, including the rupee, exposed to heightened volatility.
Recent data released by the RBI on February 27 showed that “India’s forex reserve dropped by $2.119 billion to $723.608 billion during the week ended February 20. The overall reserves had jumped by $8.663 billion to an all-time high of $725.727 billion in the previous reporting week.”
The fluctuations in reserves are now being closely watched as policymakers navigate a fragile external environment.
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