USD vs INR: Rupee in a free fall; currency nears 94 mark on West Asia war, inflation concerns

The Indian rupee hit a record low of 93.83 against the US Dollar on Monday as the war in West Asia stoked inflationary concerns, leading to weakness in the global markets.

The currency opened at 93.83 against the US Dollar against Friday's close of 93.76, falling 1.2% against the dollar, the most since February 2022.

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities said, "Sustained strength in crude is expected to significantly widen India’s import bill, putting continued pressure on the domestic currency. The macro environment remains unfavorable for the rupee, with higher energy costs and persistent dollar demand weighing on sentiment. In the near term, the rupee is expected to trade in a weaker range of 93.00–94.25 against the US dollar."

Ambit Capital in a report said it expects the rupee to depreciate by 6.5-7.5% in the next one year.

"As we expect current account deficit (CAD) to widen and capital account data to remain volatile, past data shows that oil at $90-110/bbl can cause the rupee to depreciate by 6-7.5%. This is because, with oil prices staying high longer, USD/INR can end at 97.5 to 98.9 in the absence of other positive triggers," said the brokerage.

Meanwhile, brent crude, the global oil benchmark, was trading 1.59 per cent higher at $108.10 per barrel in futures trade.

On the stock market front, Sensex crashed 1294 points to 73,238, while Nifty lost 392 points to 22,721. Foreign institutional investors sold equities worth Rs 5339.62 crore on a net basis on Friday, according to exchange data.