Rupee Hits New Low Amid Rising Oil Prices and Foreign Outflows

Rupee's Struggles Against the Dollar

Mumbai: The Indian rupee fell by 14 paise, closing at a provisional rate of 94.82 against the US dollar, nearing its historical low. This decline is attributed to soaring Brent crude oil prices, which are currently around USD 115 per barrel, coupled with persistent foreign capital outflows.

Forex analysts noted that the high crude oil prices are expected to significantly increase India's import expenses, while the ongoing crisis in West Asia raises concerns about a potential escalation of conflict, heightening investor unease.

Additionally, market participants are closely monitoring the forthcoming policy decisions from the US Federal Reserve.

The heavy selling by foreign institutional investors (FIIs) this year has further dampened market sentiment.

In the interbank foreign exchange market, the rupee opened at 94.79 against the dollar, dipped to an intraday low of 94.86, and ultimately settled at 94.82, marking a 14 paise decline from the previous close.

On the previous day, the rupee had already depreciated by 53 paise, ending at 94.68 against the dollar.

The rupee's lowest closing level of 94.85 against the dollar was recorded on March 27 of this year.

The currency continues to show weakness, pressured by ongoing FII outflows and high crude prices near USD 114, which are inflating India's import costs and inflation risks, hindering any substantial recovery.

"The trend remains bearish, with the currency facing consistent selling pressure during rebounds, indicating a lack of robust support at higher levels. In the short term, 94.40 is expected to act as resistance, while 95.25 will be the next significant support level, with the rupee anticipated to remain volatile, influenced by crude prices and capital flows," stated Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities.

Meanwhile, the dollar index, which measures the dollar's strength against a basket of six currencies, rose by 0.08 percent to 98.72.

Brent crude, the global oil benchmark, increased by 3.13 percent, trading at USD 114.74 per barrel in futures.

In a significant development, the United Arab Emirates announced its exit from OPEC effective May 1, posing a challenge to the global oil cartel.

On the domestic equity front, the Sensex surged by 609.45 points, closing at 77,496.36, while the Nifty rose by 181.95 points to reach 24,177.65.

According to exchange data, foreign institutional investors sold equities worth Rs 2,103.74 crore on Tuesday.

Additionally, India's industrial production growth slowed to a five-month low of 4.1 percent in March, attributed to weak manufacturing growth and nearly stagnant expansion in the power sector amid the West Asia crisis, as per official data released on Tuesday.

The factory output, measured by the Index of Industrial Production (IIP), grew by 3.9 percent in March 2025, according to an official statement.