INR Vs USD Today: Rising crude oil prices put pressure on the rupee, according to analystsThe rupee edged lower against the US dollar in early trade on Friday.
The rupee opened nine paise lower from its previous close of at 71.18 before trimming some of those losses.
It was last seen trading at71.20 against the US currency.
The cautious movement in the currency came amid rising crude oil prices a day after the Reserve Bank of India (RBI) maintained the status quo on monetary policy while announcing a range of measures to promote lending in key sectors.The Reserve Bank of India (RBI) kept the repo rate - the key interest rate at which it lends short-term funds to commercial banks - unchanged at 5.15 per cent and maintained an "accommodative" stance of policy.
The central bank however did hint at further rate cuts ahead.Economists said the decision was in line with their expectations with the economy showing signs of stagflation amid high food prices.Last year, the RBI lowered the key lending rates in five out of six bi-monthly reviews, reducing the repo rate by a total 135 basis points (1.35 percentage point).In an effort to boost credit growth, the RBI introduced several temporary measures on Thursday, allowing banks to do away with the need to set aside extra cash reserves against incremental lending individuals and to MSMEs.Analysts say the measures will help in restoring restore banks' confidence to lend and facilitatingtransmission of lower key rates to borrowers."The RBI is doing its best to unclog the credit channels and to ensure that banks have access to low cost liquidity for a prolonged period," another forex advisory firm IFA Global said.The removal of a mandatory requirement for commercial banks to park 4 per cent of their cash for new loans to auto, residential housing, and micro, small and medium enterprises (MSME) sectors is likely to give a temporary boost to the lenders' net interest income, forex advisory firm CR Forex Advisors said in a note.Meanwhile,crude oil prices roseafter Russia said it backs a recommendation for OPEC and other producers to deepen output cuts amid falling demand for crude as China battles the coronavirus epidemic that has hit global markets.Brent crude futures - the global benchmark for crude oil - were last seen trading 0.6 per cent higher at $55.27 a barrel, but were headedfor a fifth weekly loss amid lingering fears over the impact of the virus.India meets the lion's share of its crude oil requirement through imports.The rupee is expected to weaken further against the dollar over the coming year as a significant pickup in economic growth is unlikely, according to strategists who said the coronavirus outbreak was a downside risk in a poll by news agency Reuters.CR Forex Advisors expects the rupee to move in a range of70.70-72.20 levels in the near term.