The Indian rupee breached the 95 per dollar milestone for the first time on Monday, reaching 95.2 against the US dollar, marking a 0.3% decline. It closed at an all-time low of 94.83 per dollar, down from the previous day’s 94.81. The rupee has devalued by 4.4% against the US dollar in the March quarter.
Following the Reserve Bank of India’s reduction of the net open position limit for banks to $100 million, the rupee, which initially started strong, reversed its gains and dropped 160 paise from its opening level. Last week, the rupee experienced a 1% decline, marking its fourth consecutive weekly drop of a similar magnitude, hitting a new low of 94.84 against the dollar.
Post-market hours on Friday, the central bank mandated that banks must ensure their net open rupee positions in the onshore deliverable market do not exceed $100 million by April 10. Estimates indicate these positions range between $25 billion to over $50 billion.
Worries over soaring oil prices have led Indian stocks towards their worst monthly decline since March 2020, and bonds are on track for their weakest fiscal year since 2023. The escalation of the West Asia conflict has also contributed to the surge in global crude oil prices. Brent crude futures surged by 3% to nearly $116.70 per barrel, approaching a fresh 52-week high, while the US benchmark West Texas Intermediate (WTI) rose over 3% to surpass $103 per barrel.
During March, the rupee depreciated by over 4% amidst geopolitical tensions. On the domestic front, the Sensex closed at 71,947.55, down by 2.2%, and the Nifty ended at 22,331.40, marking a 2.14% decrease. Foreign institutional investors divested equities worth Rs 4,367.30 crore on a net basis on Friday, as per exchange data.
