Rupee weakens 23 paise versus dollar as oil prices jump

NEW DELHI – The rupee weakened sharply against the US dollar on Monday as a surge in global crude oil prices amid few signs of the war in Ukraine coming to an end eroded risk appetite, dealers said.

The partially convertible rupee opened at 76.0290/$1 as against 75.7950/$1 at the previous close. The Indian currency, which was last at 76.0140/$1, moved in a band of 76.0140-76.0950/$1 so far in the day.

The domestic currency had strengthened to a two-week high against the US dollar on Thursday as the US Federal Reserve’s policy statement did not throw up any shocks for markets globally.


The Fed raised interest rates for the first time since 2018 and signalled more hikes in 2022 as it seeks to tame runaway inflation in the US.

The rate hike was along expected lines and markets, in fact, took heart from the Fed’s optimistic commentary on growth.

Signs of overseas investors putting a brake on sales of Indian equities had also buoyed the rupee. Foreign Institutional Investors have sold more than Rs 1 lakh crore so far in 2022, NSDL data showed.

However, with the developments in Ukraine over the weekend hinting at a protracted war, sentiment for the Indian currency weakened.

Oil prices jumped $2 on Monday as Ukrainian forces dug in against heavy Russian attacks, while major oil producers reported they are struggling to produce their allotted quotas under a supply agreement.

Brent crude futures climbed $1.96, or 1.8 per cent, to $109.89 a barrel. US West Texas Intermediate (WTI) crude futures rose $2.09, or 2 per cent, to $106.79.

Elevated crude oil prices widen India’s trade deficit and exert upward pressure on inflation as the country is the world’s third-largest importer of the commodity.

The bleak outlook on inflation also took a toll on government bonds, with the yield on the 10-year benchmark paper last trading three basis points higher at 6.81 per cent. Bond yields and prices move inversely.