The Indian rupee fell to a 15-month low on Tuesday, sliding past important support levels.
The currency extended a bout of weakness to fall to a low of 75.65 against the U.S. dollar in afternoon trade, down 0.35% for the day. It recovered to close at 75.52. The rupee has now weakened 2.77% over the past one month. It is the second worst performer in Asia after the Japanese Yen.
Traders expected some resistance at the 75.40-75.50 levels. However, negative triggers such as higher oil prices, rising U.S. bond yields and consequently a stronger dollar pushed the Indian currency lower.
"The safe haven U.S. dollar again moved towards its yearly high of 94.50 (based on the Dollar Index), 10-year U.S. treasury yields stayed above the 1.60% mark," said Imran Kazi, vice president at Mecklai Financial Services. These are adding to concerns over higher oil prices. Brent Crude oil is holding above $83 a barrel, while WTI crude is above $80.
From hereon, the level of 75.90/$ will be important to watch, Kazi said.
As long as oil prices continue to climb, the rupee can weaken further, said Anindya Banerjee, vice president for currency derivatives at Kotak Securities. "The RBI should not be bothered much as volatility has been quite low over the past 14 months," Banerjee said. He added that the rupee is expected to trade in a range of 74.90-75.80 against the U.S. dollar in the near term.
The all-time low for the Indian rupee is 76.87 against the U.S. dollar, hit in April 2020.
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