Rupee Weakens Against US Dollar as Oil Prices Surge

The Indian Rupee opened weaker against the US Dollar on Thursday, falling by 6 paise to 86.42 per dollar. This comes after the Indian unit had settled at 86.36 a dollar on Wednesday.

Impact of Rising Oil Prices

Crude oil prices have reached a level not seen in over five months, which is influencing the currency's performance. In the Asian trading session, oil futures increased by 0.66%, trading at $82.57 per barrel, marking the highest price since July 26. This surge in oil prices is associated with a significant drop in oil inventories in the US, the largest economy in the world, as reported by the Energy Information Administration.

Consequences for the Indian Economy

Higher oil prices result in increased import costs for India, thereby putting additional pressure on the Rupee. Despite this, the announcement of a ceasefire in Gaza has limited further increases in oil prices.

Dollar Index Trends

On a positive note for the Indian currency, the US Dollar index has been declining for the past three days. This drop is in response to US inflation data that met expectations and a reported decrease in core inflation for December 2024. The US Consumer Price Index (CPI) figures came after the Producer Price Index (PPI) data showed a more substantial decline than anticipated.

Market Predictions

Traders anticipate that the Rupee will likely fluctuate within a range of 86.30 to 86.80 against the US Dollar for the day.

Understanding Rupee Depreciation

The ongoing depreciation of the Rupee should be viewed in the context of global economic trends and compared with other currencies. As various factors come into play, including oil prices and inflation metrics, staying informed is crucial for navigating the currency markets.

Rupee, Dollar, Oil