Indian rupee sees sharpest weekly drop in four months on oil worries

Business Recorder reported that the Indian rupee weakened on Friday, slipping 0.1 per cent to close at 95.55 per dollar. It was the currency's fourth straight daily decline, and for the week it lost 1.1 per cent, its steepest weekly fall since mid-May.

Oil prices pushed the currency lower, with crude on course to end the week above $100 per barrel, a level last seen in mid-May. Prices slipped on Friday after a Financial Times report said Middle Eastern foreign ministers were pursuing a short-term arrangement for vessels crossing the Strait of Hormuz. Higher global bond yields also weighed on the currency, wiping out most of the gains made in early September when it touched 94.30 per dollar at a two-month peak. Central bank intervention, however, limited the decline.

RBI Governor Sanjay Malhotra said the bank would have to back the foreign exchange market, and that potential dollar sales could help drain surplus rupee liquidity from the banking system. He added that the central bank was keeping every option open, including open market bond sales and FX swaps, to align overnight rates with the repo rate. Traders said the central bank had probably carried out dollar-rupee buy/sell swaps on Friday for a third session in a row to absorb extra cash.