The rise in crude will put pressure on the trade deficit, weakening the rupee

The rupee currently survives against major global currencies due to massive inflows into equities

With the rise in crude oil prices, pressure on the trade deficit has also increased the risk of depreciation of the Indian rupee. In addition, a change in US Federal Reserve policy and the Brexit stalemate could also weaken the rupee.

The rupee is also expected to remain strong as long as inflows into equities are strong, an analyst said. Last week, foreign institutional investors invested more than Rs 15,000 crore in Indian equities. The country's forex reserves have also risen sharply due to the influx of dollars.

However, the proposed widening trade deficit due to higher crude oil prices above $ 50 a barrel could depreciate the rupee against the dollar and other major currencies.

The Brexit stalemate could create volatility in the money market, the analyst added. The success of the vaccine against corona has led to a resurgence in crude oil prices in the hope that the global economy will recover.

Apart from this, the demand for petrol and diesel in India is also increasing due to which refineries are getting more crude oil.

The dollar may also strengthen in the event of a positive outlook for the US economy at the US Federal Reserve meeting, another analyst said.