Collateral damage: Rupee falters as Russia attacks Ukraine
New Delhi, February 24, 2022
The Indian rupee became a casualty of the ongoing Russia-Ukraine hostilities as it weakened by over 1 per cent on Thursday.
The rupee weakened by 1.3 per cent to Rs 75.65 per US dollar from its Wednesday's close of Rs 74.55.
Global equity indices and currencies also slid after Russia declared a military operation in Ukraine.
"The RBI let the rupee loose today with no big intervention and allowed it to catch up with other currencies and align with domestic fundamentals," said Sajal Gupta, Head, Forex and Rates, Edelweiss Securities.
"The rupee did perform maturely this time and saw orderly depreciation on the back of $630 billion-strong reserves," Gupta added.
Gaurang Somaiya, Forex and Bullion Analyst, Motilal Oswal Financial Services, said, "The rupee fell sharply in today's session as tension between Russia and Ukraine escalated. Reports of Russia invading Ukraine disturbed the overall market sentiment and led to weakness in the riskier assets as well.
"We expect the USD-INR (spot) to trade with a positive bias and quote in the range of 75.50 and 76.20."
Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities, said: "The rupee became the worst-performing currency in Asia as the Russia-Ukraine conflict roiled sentiments and strong month-end dollar demand from oil importers.
"The geopolitical uncertainties fuelled sell-off in risk assets and Brent Crude oil prices surged past $100 a barrel, resulting in the rupee falling the most since June 2021."