The Reserve Bank of India intervened in the money market to prop up the rupee after it threatened to weaken to a new record low following the rise in Brent oil prices above $90 per barrel.
On July 20, 2569 at 11.27:XNUMX p.m., Bloomberg News reported that The Reserve Bank of India (RBI) intervened in the money market to support the rupee. After weakening to near its all-time low, pressured by continuously rising crude oil prices amid tensions between the United States and Iran.
Sources in the financial market revealed that... The Reserve Bank of India (RBI) sold US dollars in both onshore and offshore markets to curb the depreciation of the rupee.
Rupee value The rupee weakened by as much as 0.2% to 96.4575 rupees per dollar, approaching its all-time low of 96.9650 rupees per dollar, reached at the end of May. The yield on 10-year Indian government bonds. It increased by 4 basis points to 6.82%.
The main pressure comes from global crude oil prices, which have risen more than 20% in the past two weeks. Brent crude has surpassed $90 per barrel following escalation in tensions between the United States and Iran, raising concerns about the stability of oil exports in the Middle East.
India imports more than two-thirds of its total oil imports, making higher oil prices a burden on import costs, putting pressure on the current account balance, and impacting international reserves. This has led investors to hold more US dollars.
Previously, on June 5, the Reserve Bank and the Indian government introduced measures to attract foreign currency inflows, including relaxing regulations on investment in domestic bonds and encouraging Native American Residents (NRIs) to deposit dollars through Foreign Currency Non-Resident (FCNR) accounts. This helped the rupee strengthen to 94.1413 rupees per dollar by the end of June.
However, the recovery in oil prices has reversed the market trend again, causing the rupee to continue weakening.
Analysts from Barclays specify that The rupee continues to face pressure from higher oil prices and increased demand for dollars from importers. Although the RBI's measures to attract foreign currency deposits through FCNR accounts have not yet yielded the expected results, it is believed that such funds will gradually flow in more frequently over the next 2-3 months.
This Barclays Evaluate that Deposits through FCNR accounts are expected to flow into India at around US$25,000-30,000 billion in the coming months, which is still lower than market expectations of around US$40,000-50,000 billion. This reflects the continued risks to the rupee from oil prices and global market volatility in the coming period.
refer : www.bloomberg.com
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