India’s currency fell Wednesday to its lowest-ever level against the U.S. dollar.
The rupee hit the record low in Wednesday trading — sinking to 73.34 per dollar. The rupee has depreciated nearly 15 percent this year, becoming the worst-performing currency in Asia apart Indonesia and the Philippines.
Crude oil prices hit a four-year high in recent weeks as U.S. oil sanctions on Iran loom next month. Brent, the international benchmark for crude, traded at $85 in Wednesday morning trading.
A rally in crude oil prices is expected to put more pressure on the rupee and it may send it near the 74-mark, said analyst Bhaskar Panda.
“However, if oil comes down to $75 a barrel, then the rupee is expected to retract significantly against the greenback,” he noted.
RBI could announce new measures to stem the fall of the currency at its meetings this week.
“There could be an upward revision in the inflationary projections for the year on account of higher oil prices, increase in MSPs and imported inflation (on back of rupee depreciation),” CARE Ratings said in a research note.
Despite the fall Wednesday, India’s economy is on track to become the third largest in the world by 2030.
Experts say the Indian economy could also grow to $6 trillion by 2030 — by which time the U.S. economy will be $32.6 trillion and China $33.7 trillion. India’s large population of young people will also make it the world’s most populous country by 2022, passing China.