Rupee faces further weakening as oil shock persists: ANZ's Dhiraj Nim warns

• ANZ's Dhiraj Nim warns the Indian rupee could weaken further, potentially reaching 95 or lower, if current macro pressures and Middle East conflict persist.
• Elevated crude prices, with India's crude basket more expensive than Brent, are a central risk amplifying pressure on the currency.
• RBI is adopting a calibrated approach, allowing the exchange rate to act as a shock absorber, intervening to smooth volatility rather than aggressively defending a specific level.
• Declines in gold prices have led to valuation pressures on foreign exchange reserves, potentially limiting RBI's intervention capacity.
• Oil shock could lead to increased fiscal pressures, higher yields, and risks of fiscal slippage, alongside building inflation pressures as producers absorb rising input costs.