The Indian rupee has hit a record low on Friday, going past 82 to the US dollar as rising oil prices and signals from the US Federal Reserve of more rate hikes weighed on the currency. The INR is trading at 22.42 against the UAE dirham.
India is among the world’s biggest oil importers, and the recent jump in oil prices following the OPEC+ decision to make deep production cuts in response to falling prices has caused oil prices to climb. Brent crude is trading at $94.31 per barrel on Friday.
The US Fed on Thursday indicated that it would continue with interest rate hikes until the pace of inflation slowed.
"An uptick in crude prices has caused concerns around trade deficit to resurface. US rates staying higher for longer is not helping (India's) capital account. RBI seems to have become conservative in spending Reserves. These factors are causing the Rupee to adjust," India-based forex advisory firm IFA Global said in a note.
The US dollar index, which tracks the greenback versus a basket of six major currencies, has strengthened by 15% since the beginning of the year, data from Refinitiv’s Eikon showed.
According to a Reuters poll, the INR is likely to trade near its record low even beyond this year, remaining vulnerable to a worsening trade balance and the aggressive Federal Reserve rate-hiking campaign.
(Reporting by Brinda Darasha; editing by Seban Scaria)