Authors: Khushi, Sejal Sachdeva, Riya Pananilath

Abstract

India is a net importer of crude oil and gold, and therefore the Indian Rupee (INR) is very sensitive to changes in global commodity prices. India imports nearly 85 per cent of its crude oil and over 90 per cent of its gold, both priced in US dollars. As these commodities become more expensive, India’s import bill rises, demand for dollars increases, current account deficit increases and the Rupee depreciate. The present paper examines the impact of international crude oil prices and gold prices on the USD/INR exchange rate during the period January 2020 to March 2026 based on monthly data. The study period includes several major global disruptions, all of which have been associated with significant volatility in commodity and currency markets. The results are expected to provide a basic understanding of the influence of these two commodities on the changes in exchange rate in India and implications for monetary policy, trade strategy and financial market risk management.