The rupee hit a fresh lifetime low of 77.01 per dollar on Monday after starting the session at a low of 76.96 as a surge in crude oil above $130 to threaten push up imported inflation and widening trade deficits.
The currency was trading over 1 per cent weaker at 77.01 per dollar, provisionally, after touching a previous life low of 76.96 earlier on Monday. On Friday, the currency fell to close at 76.17 against the US dollar, its lowest closing level since December 15, 2021.
Increased flight to safety bets has pushed the dollar up, driven by intensifying geopolitical risks due to the Russia-Ukraine conflict that pushed investors to safe-haven assets.
Forex traders said escalating tensions between Russia and Ukraine kept crude oil prices elevated and heightened worries about domestic inflation and broader trade deficits.
“The Rupee hit an all-time low…as global markets continued to reel under selling pressure. Global emergency are facing a heightened of a recession this year as Russia’s invasion of Ukraine severely disrupts supply chains and has flared up commodity prices since the conflict began,” noted the currency desk at Emkay Global Financial Services.
“Brent crude oil prices have rallied by another 10% this morning as they are trading at $130/bbl. Important metals like Nickel, Aluminum and Copper prices have also rallied to hit all-time highs. Despite surging prices, the United States and European allies mull a Russian oil import ban. A boycott would put enormous pressure on the already tight supply side. A reversal of the recent losses will be seen only if the spot USDINR pair breaks below 76.50. The pair will have upside targets of 77.30/77.52 levels until support holds,” they added.