The rupee started Monday on a weak note as the dollar soared to a new two-decade high driven by an energy crisis in Europe after Russia turned off a a gas supply pipeline to the region, leaving the euro near its 20-year trough.
Bloomberg showed the Indian currency was last changing hands at 79.8138 per dollar, compared to its previous close of 79.8025.
On Friday, the rupee ended lower versus the dollar, but closed up 0.1 per cent for the week, its first gain in three.
That suggests more drawdown from the country’s forex reserves, which have now fallen to over two-year lows and are down over $80 billion from last year’s peak.
The domestic currency last week traded between 79.30 and 80.12 range gyrating between interventions from the Reserve Bank of India and widespread dollar strength.
Last week’s range is “our new support and resistance levels” for the USD/INR pair, a trader at a Mumbai-based bank told Reuters. It will be “quite a task to take out the 80 level”, he said, adding that the psychological level “will continue to attract” speculators and exporters.
The euro fell as a result of Russia’s decision to permanently shut down its main gas supply pipeline to Europe, which fueled concerns about an energy deficit and a drag on economic growth. As a result, the dollar index jumped to 110.02, a new two-decade peak.
Tracking the sky high dollar Asian currencies fell with the Korean won down 0.6 per cent, and the offshore Chinese yuan declining to 6.9378 to the dollar.
Oil prices climbing also did not bode well for the rupee.
On Monday, oil prices jumped by more than $1 a barrel as investors anticipated potential actions by OPEC+ producers to adjust production and support prices at a meeting later in the day.