Mumbai, Sep 17 : The Indian rupee came under renewed pressure on September 16, touching its weakest level since late July as rising crude oil prices and expectations surrounding US monetary policy weighed on investor sentiment.
The currency’s decline was also linked to strong dollar demand from Indian companies. Market participants were closely watching the US Federal Reserve’s policy decision, with expectations of a rate increase adding to pressure on emerging-market currencies.
The rupee had already been facing challenges from elevated energy prices. Brent crude remained above the $100-a-barrel level amid continuing uncertainty over oil supplies and disruptions in the Middle East.
Higher crude prices are a concern for India because the country depends significantly on imported oil. A sustained increase in energy costs can raise the import bill and increase demand for foreign currency.
The Reserve Bank of India has been closely monitoring movements in the foreign exchange market, with state run lenders seen selling dollars to limit excessive volatility.
Investors were also assessing the possible impact of higher US interest rates on global capital flows. A stronger dollar and higher US yields can influence foreign investment flows into emerging markets.
The currency market is expected to remain sensitive to movements in crude prices, US interest rates and global risk sentiment in the coming sessions.