Explained: Why surging oil prices is bad for Indian rupee
India TodayThe Indian rupee could come under pressure and decline significantly in comparison to the US dollar, analysts have warned. Analysts quoted in a Reuters report fear that a combination of factors, including surging crude oil prices and a rally of the US dollar index, could lead to a significant decline in the Indian currency’s value. Oil on the boil Brent crude, a key factor influencing India's economic outlook, has experienced an 11.62 per cent increase this month and a substantial 29.35 per cent surge in the past 6 months due to supply concerns. Gaura Sen Gupta, economist at IDFC First Bank told Reuters that depreciation pressures on INR is “expected to be higher in the near term with crude oil prices above $90 and dollar strength”. Nomura, a leading financial services group, highlighted that this situation presents an “adverse terms-of-trade shock for Asia”, with countries like India, Thailand, and the Philippines appearing more vulnerable to the impact of higher oil prices.