The rupee continues to feel the heat of rising commodity prices, particularly crude oil, and India’s widening trade deficit.

The declining trend in the rupee prompted Standard Chartered and RBL Bank Ltd to forecast that the currency would depreciate to 76 per dollar by year-end. Deutsche Bank AG has a slightly less pessimistic projection of 75.

On Monday, the Indian currency closed at 74.58, higher by 6 paise over its last close. On Friday, the rupee had settled at 74.64 against the dollar.

The surge in crude oil, which leads to more demand for dollars, have heightened apprehensions over a further slide in the rupee. Though rising crude oil prices are a deterrent, they can be countered by foreign inflows and the sale of dollars by the RBI, which will provide support to the currency, analysts said.

They said funds infusion such as the $3.6 billion pumped into Flipkart by marquee names such as Softbank and Canada Pension Plan Investment Board will prop up the dollar.

On the portfolio front, the Zomato IPO is set to open for subscription on July 14. One97 Communications, the parent of digital payment firm Paytm, is also set to file its draft prospectus shortly.

“The higher oil price is not sufficient to take the US dollar higher. The dollar rupee value is driven by capital flows be it portfolio flows or FDI. Over the short term, these flows have the biggest impact on the pair. Inflows are likely to remain robust and these would continue to support the rupee,’’ Anindya Banerjee, DVP, currency derivatives & interest rate derivatives at Kotak Securities, told The Telegraph.

Banerjee feels the rupee is likely to move in a range of 74.20-75.00 over the near term.

Moreover, India’s foreign exchange reserves now stand at a record high of $610 billion. This could provide another comfort to the rupee as the RBI could step in should the currency depreciate sharply.

Meanwhile, oil prices fell on Monday as concerns about slowing global growth outweighed the prospect of tightening supply. Brent crude for September fell 45 cents, or 0.6 per cent, to $75.10 a barrel by 12:08 pm. US West Texas Intermediate crude for August was at $74.07 a barrel, down 49 cents, or 0.7 per cent.

Both benchmarks fell about 1 per cent last week but remained close to highs not seen since October 2018.