Oil refiners around the world are now demanding US dollars to settle payments, not local currency. This development helped push the DXY index to a 100.20 level in August for the first time in three months. The last time the DXY index fell below the 100 mark was in May 2025. It took more than three months for the currency to reach the index’s triple digit range.
The Surge came after oil suppliers became obsessed with demanding US dollars from importers for settlers. The Indian rupee was hit hardest as it soaked 2.7% in a month. The USD/INR trading pair shows that greenbacks have dominated the charts since July. The rupee has fallen to a low of 87.70, indicating a wider debilitating effect in the index. However, the rupee has increased by nearly 2.40% since the start of the year.
Dollar demand from oil companies rises and local currency declines
According to the Economic Times US dollar report, a strong US dollar inflow into oil refiners has strengthened the DXY index. “Consistent foreign outflows from local stocks and increasing demand for corporate dollars are likely putting the rupee under pressure.” The private bank trader said.
However, the DXY index fell at Monday’s opening bell, dropping from 100 to 98.80 range. The fall comes from the tariffs Trump has put against the dollar on India and Brazil. Trump’s policies have erod recent profits from the US dollar, which came from the oil sector.
The oil sector was dominated by the US dollar for decades before developing countries recently took another course. India, Nigeria, Brazil, China, South Africa, Russia, Iran and others began using local currency for their settlements. Oil companies cannot handle the influx of local currency as they affect their balance sheets and dig into revenue.
