The Indian rupee traded around 95.4 per US dollar, slipping slightly after touching its strongest level in nearly two weeks, as renewed geopolitical tensions and stronger dollar demand from importers weighed on the currency. Fresh US military strikes in southern Iran dampened hopes for a near-term peace agreement in the Middle East, while Brent crude prices rebounded more than 2% to above $98 per barrel after a recent pullback.
The rupee had previously recovered from record lows of 96.96, helped by improved risk sentiment and dollar-selling interventions by the Reserve Bank of India. However, traders expect the recovery to face resistance from typical month-end dollar demand by importers and the expiry of offshore non-deliverable forward contracts.
At the same time, concerns about imported inflation have intensified after India raised compressed natural gas prices, following an earlier fuel price hike this month. In response to the evolving inflation outlook, Goldman Sachs has revised its forecast higher and now anticipates two additional RBI rate hikes this year.
