Rising crude prices, strong US data push rupee to 96.14 per dollar

The Indian rupee breached the psychologically significant 96-per-dollar level during intraday trade on Friday, 15 May before closing at a record low against the US currency, pressured by soaring crude oil prices, persistent strength in the dollar and growing global uncertainty.

The domestic currency eventually settled 21 paise weaker at 95.97 against the US dollar after touching an intraday low beyond the 96 mark.

The rupee has emerged as Asia’s weakest-performing currency in recent weeks as India faces a sharply rising import bill due to elevated global energy prices.

Market analysts attributed the decline to a combination of strong US economic data, hawkish signals from American policymakers and increasing investor demand for safe-haven assets.

Amit Pabari, managing director of CR Forex Advisors, said the US dollar remained firm after stronger-than-expected retail sales and resilient labour market data reduced expectations of aggressive interest rate cuts by the US Federal Reserve.

He noted that periods of heightened global uncertainty generally push investors towards the dollar, increasing pressure on emerging market currencies such as the rupee.

Santosh Meena, head of research at Swastika Investmart, said the rupee’s fresh record low reflected broader global macroeconomic concerns. According to him, higher crude oil prices were increasing India’s import costs, while elevated US interest rates and foreign fund outflows were adding to pressure on the domestic currency.

The rupee’s weakness coincided with volatility in Indian equity markets. Benchmark indices surrendered early gains during the session, with the Sensex falling more than 200 points from the day’s high to trade in negative territory.

The decline also came on the same day the Centre raised petrol and diesel prices by Rs 3 per litre with immediate effect in an attempt to curb fuel demand amid supply disruptions linked to the Iran conflict.

Global oil prices remained elevated, with Brent crude trading above $109 per barrel, while the dollar index extended gains for a fourth consecutive session. Market sentiment remained cautious after talks between US President Donald Trump and Chinese President Xi Jinping failed to produce breakthroughs on key geopolitical issues, particularly tensions involving Iran.

Analysts said unresolved disagreements over Taiwan and China’s energy relationship with Iran added to investor nervousness and strengthened demand for the US dollar.

Meanwhile, the Indian government has initiated a series of measures aimed at managing external pressures and containing economic risks. After tightening restrictions on gold imports under the Advance Authorisation scheme earlier this week, the government also moved to moderate fuel consumption through higher retail fuel prices.

Economists said the steps reflected broader concerns over rising commodity prices, geopolitical instability and increasing pressure on India’s current account deficit. Despite currency weakness, Indian equities showed some resilience in early trade, supported partly by foreign institutional investors turning net buyers in the previous session.

With PTI inputs