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The Indian rupee fell to a record low on Tuesday, 5 May, following US-Iranian strikes in the Gulf that unsettled markets, diminishing hopes for a resolution and heightening concerns about the challenges facing the oil-importing economy.
The currency declined to 95.39 per dollar, dropping 0.3% for the day and surpassing its previous record low of 95.33, set the previous Thursday. The rupee started off 22 paise lower at 95.31 against the US dollar.
According to reports, Asian currencies sensitive to oil, including the Indonesian rupiah and Philippine peso, declined on Tuesday amid Gulf tensions that challenged a delicate ceasefire and sparked investor anxiety.
Experts believe that while surging oil prices have amplified global risk sentiment, a parallel concern is emerging from the US fiscal situation. For the first time since World War II, the US national debt has exceeded the size of its economy, creating a psychological overhang for markets. This has raised questions over how long the Federal Reserve can keep interest rates elevated, effectively capping the dollar’s upside despite safe-haven demand.
At the same time, analysts point to a possible renewed intervention by Japanese authorities after last week’s reported $35 billion action to support the yen, which could further limit the dollar's global strength.
However, for India, experts stress that the primary pressure point remains crude oil. As a major importer, rising oil prices have significantly increased dollar demand, driving the rupee to record lows despite stable domestic fundamentals, including expansionary manufacturing activity. They also highlight factors such as unwinding of NDF positions, adding to dollar demand.
With forex reserves easing from recent peaks, analysts say the Reserve Bank of India's intervention is becoming more challenging. Reports suggest the RBI may explore measures such as attracting NRI deposits or easing investment norms to boost dollar inflows—steps that have historically helped stabilise the currency.
According to Amit Pabari, MD, Research Team, CR Forex Advisors, the 95.30–95.50 range is expected to act as a strong resistance in the near term. A near-term pullback toward 94.20–93.80 is likely, though underlying pressure persists amid elevated oil-driven dollar demand.
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Dhanya Nagasundaram works as a Content Producer at LiveMint, specializing in news related to financial markets, stocks, and business. With over eight years of experience in journalism and content creation, she has honed her skills in data-driven reporting and market analysis. Her focus is on monitoring stock trends, initial public offerings (IPOs), corporate news, policy shifts, and larger economic trends that affect investors and market players. <br><br> At LiveMint, Dhanya consistently writes and produces articles that make complex financial topics accessible to readers. She keeps a close eye on equity markets, commodities, and macroeconomic indicators, assisting audiences in comprehending how global and domestic events influence investment perspectives. Her stories frequently underscore emerging trends within sectors, the IPO market, company earnings results, and market strategies pertinent to both retail and institutional investors. <br><br> Before her tenure at LiveMint, Dhanya accumulated a wealth of professional experience at various companies, including MintGenie, Informist, Cogenics, Chary Publications, KPMG, and the Royal Bank of Scotland. These positions allowed her to establish a solid foundation in financial research, reporting, and content creation. <br><br> Throughout her career, she has explored numerous subjects such as trading strategies, commodities, IPOs, wealth generation, corporate profits, and macroeconomic indicators. Her background in both financial journalism and corporate settings has given her the ability to tackle stories with analytical rigor while ensuring clarity for her audience. Through her contributions, Dhanya strives to deliver insightful, trustworthy, and investor-centric financial content.
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