The value of India's currency, the rupee, is under pressure again as a sharp rise in global crude oil prices has pushed the currency close to its lowest level in history.
To ease the pressure, the Reserve Bank of India (RBI) reportedly intervened in the foreign exchange market by selling US dollars to help stabilize the rupee.
The rupee was reported to have fallen 0.2 percent to 96.4575 against the US dollar, almost matching the record low recorded in late May.
At the same time, the yield on India's 10-year government bonds also rose, reflecting investors' concerns about the current economic situation. Investments
The pressure on the rupee is due to the rise in Brent crude oil prices, which have jumped more than 20 percent in two weeks and now exceed US$90 a barrel.
The rise is driven by escalating tensions between the United States and Iran.
As a country that imports more than two-thirds of its oil needs, India faces higher import costs when oil prices rise.
This situation increases the demand for the US dollar and puts pressure on the country's foreign exchange reserves.
Previously, the Indian government and the RBI have introduced several measures to attract more foreign currency into the country.
Among them are relaxing investment conditions in local bonds and encouraging Indians living abroad to keep deposits in foreign currencies.
These measures helped strengthen the rupee in late June, but the effect was not sustainable when oil prices surged again.
Barclays analysts expect foreign currency deposits from Indians abroad to bring in between US$25 billion and US$30 billion in the next few months.
While the amount is seen as being able to help support the rupee, it is still lower than market expectations.
For now, the direction of the rupee is expected to continue to depend on movements in world oil prices and the effectiveness of measures taken by the Indian authorities
