An Impact of Crude Oil Price on Currency Exchange Rate

Abstract

The crude oil price in India involves analyzing various factors influencing its value, including demand and supply aspects, geopolitical unrest, manufacturing plans of oil producers, resource availability, currency exchange rate, commodity market cycle and other domestic factors, such as government policies, taxes, subsidies, etc. also impact the price of crude oil in India. Understanding these factors and their interplay helps forecast and interpret fluctuations in crude oil prices, which is crucial for business investors, policymakers and consumers in India. Increasing demand for crude oil in India would increase the demand for the dollar and, in turn, lead to a weakened Rupee value against the dollar. In 2025, OPEC expects India’s oil demand to rise by an average of 228,000 barrels per day on the back of healthy economic growth amid steady manufacturing activities. An analysis of the impact of crude oil price on the currency exchange rate attempts to examine the trends of crude oil price fluctuation and currency exchange rate and to reveal the relationship between the price of crude oil and Indian currency exchange value for a period from 2013-2014 to 2022–2023 totally ten financial years.