The rupee opened 5 paise lower at 94.87 against the US dollar on Wednesday, 9 September, pressured by a further rise in oil prices that is likely to test the Reserve Bank of India’s ability to support the currency.
The Indian currency had its sharpest decline in nearly a month on Tuesday as higher oil prices offset the RBI’s efforts to keep the rupee anchored. The central bank has stepped up its intervention in the foreign exchange market in recent weeks, at times aggressively, helping the rupee recover to a two-month high late last week.
Although the RBI was present in the market on Tuesday, traders said its intervention was not sufficient to prevent the rupee from weakening.
The move marked a shift from recent trading patterns and could indicate that the RBI is becoming less willing to support the rupee aggressively when the underlying pressure stems from higher oil prices, a currency trader at a bank said, according to a Reuters report.
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