The Indian rupee traded near 96.4 per dollar, stabilizing after hitting its weakest level in more than two months, but it remained under pressure from sharply rising oil prices. Escalating tensions between the US and Iran pushed Brent crude above $96 per barrel, amplifying concerns about potential disruptions to oil supplies and darkening the outlook for India, the world’s third-largest oil importer. Market participants also cautioned that the rupee could face renewed depreciation if Brent crosses the $100 threshold.
Still, sentiment found some support from expectations that the Reserve Bank of India would continue to step in if currency volatility intensifies. The central bank was a net seller of $6.1 billion in the foreign exchange market in May, following net sales of $8.9 billion in April. Further backing for the rupee came from stronger foreign inflows into Indian bonds and equities after the RBI introduced measures to attract overseas capital. In addition, India’s foreign exchange reserves remained robust, sufficient to cover roughly 10 months of imports.
