Oil prices surpass $100, triggering panic in the forex market; Indian rupee breaks support and falls to a historic low

Golden Ten Data reported on March 12 that due to soaring crude oil prices causing the Indian rupee to fall to a historic low, local importers are seeking hedging options, driving up the cost of hedging against further depreciation of the local currency. Sajal Gupta, Head of Forex and Commodities at Nuvama Institutional, stated that importers are preparing for a scenario where the Middle East crisis may drag on; if the rupee breaks below the 92.40 threshold, it could “very quickly” depreciate to 94. He pointed out: “Indian importers are usually under-hedged before widespread panic occurs, and now everyone is facing hedging pressure.” On Thursday, concerns that soaring oil prices would increase India’s import expenditure pushed the rupee to a historic low of 92.3638 per US dollar. Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, said that while importers are hedging, exporters are delaying the sale of forward dollars due to expectations that the rupee will weaken further, which has intensified the upward pressure on hedging costs.