BUZZ-COMMENT-Winds of change continue to pummel INR

Jan 14 (Reuters) - The U.S. administration's toughest sanctions so far targeting Russia's oil and gas revenues mark the latest in a long line of developments that have changed the landscape for the Indian rupee in the past month.

The sanctions will severely disrupt Russian oil exports to major buyers India and China. Oil prices have jumped 6.5% since Friday on supply concerns.

India imports about 85% of its over 5 million barrels daily oil needs and the surge in prices will worsen an already widening trade deficit, hurting the INR. The flow-on effect on still sticky inflation will also constrain the Reserve Bank of India from reducing interest rates to support a slowing economy.

The trade-weighted rupee is, however, at its strongest in at least two decades and the RBI's latest bulletin suggested the currency was around 8% overvalued in November. This has fuelled a growing perception that the new RBI governor, Sanjay Malhotra, may not manage the INR as rigidly as his predecessor. India's falling currency reserves also argue against aggressive intervention.

Sizable outflows of $4 billion from domestic stocks and bonds in January due to rising U.S. yields have also weighed on the INR.

Indeed, USD/INR rallied to a fresh all time-high and logged its biggest single-day rise in nearly two years on Monday. A further move to 87.00 appears only a matter of time. Supports are now at 85.97-86.00 and 85.80.

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(Krishna Kumar is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai)

((krishna.k@thomsonreuters.com))