The Indian rupee plunged to new depths Wednesday as investors turned away from riskier assets ahead of a possible U.S.-led military strike in Syria, adding to an already dismal year for the currency.
In response, the Reserve Bank of India said it would sell U.S. dollars from its reserves to three oil companies in order to meet their daily dollar requirements, effective immediately with no end date set, according to a central bank statement. Oil companies make up about 40% of the demand for dollars on average each month, according to the Times of India.
Dollar-denominated oil futures topped $110 on Wednesday, reaching their highest level in more than two years, boosted by Syria worries.
While the rupee has set a string of record lows in recent weeks, Wednesday’s drop was particularly severe. Bloomberg described the rupee’s slump as the steepest since at least 1993, citing prices it compiled from local banks. The U.S. dollar USDINR 0.0000% recently fetched 68.825 rupees, up from 66.19 rupees late Tuesday in North America.
The rupee is one of weakest emerging-market currencies so far this year. The U.S. dollar has surged 25.2% versus the currency, more than its 21.8% gain against the South African rand and the 13.9% increase versus the Brazilian Real.