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The Indian rupee faced fresh challenges as it closed at a new record low on Monday, despite support from the Reserve Bank of India (RBI), driven by escalating crude oil prices that heightened demand for the U.S. dollar.

Closing at 83.2675 against the U.S. dollar, compared to the previous session’s 83.1850, the rupee weakened beyond its earlier record closing of 83.2175 set earlier in the month. While the RBI stepped in to provide potential dollar sales, it struggled to keep the rupee above lifetime lows. Notably, the rupee had hit a historic low of 83.29 in October of the previous year.

According to a foreign exchange trader from a private bank, the RBI appeared to offer dollars within a range of 2-4 paise, rather than guarding a specific exchange rate. Despite initial buying interest, the rupee faced strong resistance beyond the 83.24 mark against the U.S. dollar.

Adding to the pressure, Brent crude oil futures soared to $94.78 per barrel, their highest level since November 2022, while the dollar index stood at 105.31, a marginal dip of 0.04%. Brent crude had surged by 9.1% in the current month and over $20 (approximately 30%) since June, primarily driven by supply concerns.

Across Asia, most currencies weakened, with the offshore Chinese yuan leading the losses. Sajal Gupta, head of forex and commodities at Nuvama Wealth Management’s institutional desk, emphasized the importance of the central bank’s resolve in determining the rupee’s future path towards another record low.

In the coming week, investors will closely monitor significant central bank decisions, starting with the U.S. Federal Reserve on Wednesday, followed by the Bank of England and Bank of Japan. While the Fed is expected to maintain its current interest rates, its guidance on interest rates, inflation, and economic growth will be of particular interest.

It’s worth noting that Indian financial markets will be closed on Tuesday due to a local holiday, adding to the anticipation surrounding future developments in currency markets.