Suryaa Business Desk: Indian rupee is under severe pressure due to rise in crude oil prices in the international market and outflow of foreign funds from domestic markets. The Indian rupee is under severe pressure due to the increase in crude oil prices in the international market and the outflow of foreign funds from the domestic markets. The rupee weakened in Monday's trading due to uncertainty in the global financial markets. Economists are analyzing that demand for dollars by importers and lack of sufficient foreign exchange inflows are having a negative impact on the currency. Unsustainable international crude oil prices have become a major concern for an energy importing country like India.
Foreign exchange reserves are under increasing pressure as domestic companies have to shell out huge dollars for oil purchases. In addition to this, as there is no clarity on the US Federal Reserve's policy of interest rates, global investors are turning towards US bonds which are safe investments. As a result, foreign portfolio investment (FPI) has been moving away from developing country equities in a big way. A sluggish environment in domestic stock markets and a pattern of corporate quarterly results are also weighing on the rupee's strength. The Reserve Bank of India (RBI) is keeping a close eye on the market to prevent further depreciation of the rupee as the demand for dollars in the market exceeds the supply.
Trading sources claim that central bank is trying to bring stability in currency markets by intervening in necessary cases. In the current economic situation, stabilization of crude oil prices and flow of foreign investment back into the market is very important to withstand the fluctuations in the value of the rupee, experts opined. In the coming days, international developments and decisions by central banks will play a vital role in dictating the course of the Indian currency.
