Indian rupee falls to fresh record low of Rs 93.84, traders eye RBI action

Indian rupee

• Rupee hits record low at Rs 93.84 amid West Asia war tensions
• Brent crude hits $112, up 50% since February
• RBI intervenes as forex reserves fall by $7.05 billion

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The Indian rupee opened 10 paise lower to a fresh record low on March 23, as oil prices remained elevated due to the war in West Asia, while traders were keeping an eye out for any action from the Reserve Bank of India (RBI) to prop up the currency.

The local currency was trading at Rs 93.84 to the dollar, as compared to Rs 93.71 per dollar in the previous trading session. March 20 saw a near 100 paise drop in the rupee, the worst intra-day fall in four years.

The war in West Asia has escalated in the third week, with Iran saying that it would strike the energy and water systems of its Gulf neighbours if U.S. President Donald Trump followed through with a threat to hit Iran's electricity grid in 48 hours.

Brent crude prices were trading at $112 per barrel, and have risen about 50 percent ever since the war broke out in late February.

Domestically, the RBI has been intervening, albeit on an intermittent basis, in order to prevent the rupee from falling into a free-fall, but importers such as oil marketing companies have also been aggressively buying the greenback, anticipating further weakness in the currency. India’s forex reserves fell by $7.05 billion to $709.76 billion in the week ending March 13, according to the latest RBI data

“The rupee is now approaching an important level. The Rs 94.00 mark is expected to act as a strong resistance, given its psychological significance. Any de-escalation could trigger a quick recovery of 1.00–1.50 rupees, while continued tensions may keep the currency under sustained pressure,” Amit Pabari, managing director at CR Forex Advisors said.