Rupee depreciates to ₹93.71 as oil prices continue to surge

The rupee depreciated 82 paise hitting an all new low of ₹93.71 a dollar on surging geopolitical tensons, oil prices and persistent foreign fund outflows.

Besides the war keeping essential commodities’ prices sticky on crude futures prices crossing $108/barrrel, aggressive outflow of foreign funds from Indian stock markets have also intensified currency pressures. On Monday, foreign investors sold ₹10,965.7 crore in equities alone. In the first 20 days of March, FIIs withdrew ₹88,180 crore. This is the worst number since September 2024, when for the whole month, ₹94,000 crore equities sold. Foreign Institutional Investors (FIIs) exit from Indian market leads to an outflow of dollars, leading to increased supply of rupee leading to its plunging value.

“With Indian Government having budgeted oil at $75 per barrel, every $10 increase in prices will increase the CAD (current account deficit) by $1 billion and we are in for a steeper depreciation” said Anil Bhansali, said Head of Treasury and Executive Director, Finrex Treasury Advisors LLP. CAD is the difference between import and export values.

At the current rate of increase in crude oil prices, the rupee-dollar pair is only slated to see further downside, some say experts.

“While exporter dollar selling may pick up toward year-end, it is unlikely to offset the near-term pressures from rising crude and persistent dollar demand. As long as Brent trends higher, with a potential move toward $120, the rupee is expected to remain under pressure. The RBI is likely intervening actively through both spot and forward markets, but its role will largely be to smoothenvolatility rather than reverse the trend,” said Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities.

Analysts forecast the rupee to stay between ₹93 and ₹94.25 and a breach above that would mean the currency pair hits ₹95 a dollar.