The Indian rupee steadied around 95.5 per dollar, halting its recent slide as traders cited likely intervention by the Reserve Bank of India, which is thought to be selling dollars to curb excessive volatility.
Nonetheless, the currency stayed under pressure amid escalating geopolitical risks. Fresh US military strikes on Iran, followed by retaliatory attacks on Kuwait and Bahrain, stoked fears over potential disruptions to oil supplies. Brent crude extended its rally, climbing more than 8% over the past two sessions.
The risk-off tone also weighed on domestic markets. The benchmark 10-year government bond yield rose 7 basis points on Wednesday, its largest single-day increase in more than three months, while Indian equities declined 2%, marking their sharpest fall over the same period.
At the same time, minutes from the latest Federal Reserve meeting reinforced expectations of a more hawkish US monetary stance. Futures now price in roughly a one-in-three probability of a rate hike this month and a two-in-three chance of an increase by September.
