Rupee falls to record closing low as rising oil pushes up dollar demand

The Indian rupee fell to a fresh record closing low on Monday, despite likely help from the Reserve Bank of India, as rising crude oil prices pushed up dollar demand.

The rupee closed at 83.2675 against the U.S. dollar, compared with 83.1850 in the previous session. The local unit weakened beyond its previous record closing of 83.2175 hit earlier this month.
 

Possible dollar sales from the RBI helped the local unit stay above lifetime lows. The rupee had fallen to a record low of 83.29 in October last year.
 

"RBI wasn't guarding any one level but was instead seen offering dollars in a range of 2-4 paise," a foreign exchange trader at a private bank said.
 

 

"Initial buying was there but beyond 83.24, there is stiff resistance (for USD/INR)."
 

Brent crude oil futures hit $94.78 per barrel, their highest level since November 2022, and the dollar index was at 105.31, lower by 0.04%.
 

Brent has risen 9.1% so far this month and 30%, or more than $20, since June on worries over supplies.
 

Asian currencies were mostly weaker with the offshore Chinese yuan leading losses.
 

"It all depends on the resolve of the central bank," said Sajal Gupta, head of forex and commodities at Nuvama Wealth Management's institutional desk, referring to the rupee's likely trajectory towards a fresh record low.
 

Investors will be keeping an eye on key central bank decisions this week starting with the U.S. Federal Reserve on Wednesday, and followed by the Bank of England and Bank of Japan.
 

The Fed is widely expected to keep rates unchanged. Its guidance on interest rates, inflation, and growth will be closely watched.

Indian financial markets will be shut on Tuesday due to a local holiday.