The Indian rupee weakened to about 95.6 per dollar, surrendering part of its recent gains as rising tensions between Iran and the United States drove a sharp increase in global oil prices. Earlier in the week, the currency had firmed after dollar sales by state-owned banks, which traders believe acted on behalf of the Reserve Bank of India. However, they warned that the rupee’s sustained stability will hinge largely on developments in the energy market.
Elevated crude prices remain a key concern for India after Brent crude climbed to around $95.50 per barrel, following fresh US strikes on multiple targets in Iran overnight. In response, Iran announced plans to close the Strait of Hormuz and declared retaliatory attacks on 18 US military targets in Kuwait and Bahrain.
The rupee is also under pressure from a deteriorating global risk backdrop, as extended losses in US equities have boosted safe-haven demand for the dollar.
