Currency under pressure from rising oil prices over the past year
The Indian rupee slumped to an all-time low against the U.S. dollar on Thursday as the currency comes under increasing pressure from rising oil prices.
The rupee, Asia’s worst performing currency according to Bloomberg News, fell to 69.10 against the greenback in early trade before recovering slightly to 68.93 later.
India is a massive importer of oil, securing more than two-thirds of its needs from abroad. A surge in oil prices over the past year to around $78 a barrel has meant more rupees are needed to purchase crude. This has put pressure on the Indian currency, making it less appealing to investors who are betting less on the emerging markets as a whole. That has contributed to a widening of India’s current account deficit—when the value of imports exceeds the value of exports.
The strong dollar is affecting the value of currencies across Asia.
On Thursday, Indonesia’s rupiah fell to the lowest level since October 2015.