Indian Rupee Slips Amid Oil Surge

The Indian rupee fell to around 95.6 per dollar, giving up part of its recent gains as escalating tensions between Iran and the United States fueled a sharp rise in global oil prices. Earlier this week, the currency strengthened after dollar sales by state-owned banks, which traders believe were conducted on behalf of the Reserve Bank of India. Despite the RBI's efforts, traders cautioned that lasting stability in the rupee would depend heavily on developments in the energy market. Higher crude oil prices remain a major concern for India after Brent crude surged to about $95.50 per barrel following fresh US strikes on multiple targets in Iran overnight. Iran responded by announcing plans to close the Strait of Hormuz, while also declaring retaliatory attacks against 18 US military targets in Kuwait and Bahrain. The rupee also faces pressure from a weaker global risk environment, with US equities extending losses and boosting demand for the dollar.

The Indian rupee strengthened to around 95.1, pausing recent losses as signs of central bank support helped stabilize the currency. Traders pointed to likely dollar sales and longer-term dollar-rupee swap operations after pressure from maturing offshore non-deliverable forward positions pushed the rupee to an intraday low earlier in the session. Traders indicated that the RBI may have sold dollars in the spot market to curb excessive volatility while simultaneously conducting longer-term dollar-rupee swap operations. The combination of spot intervention and swap transactions likely helped ease immediate pressure on the rupee without significantly tightening domestic liquidity conditions. However, the rupee continues to face challenges from higher crude oil prices, persistent foreign fund outflows, and a strong US dollar. Investors are also watching upcoming U.S. economic data and Federal Reserve policy signals, which could influence the currency's near-term direction.

The Indian rupee firmed to around 95.4 per dollar, pausing losses as easing geopolitical tensions and softer crude oil prices improved sentiment across Asian markets. A drop in global energy prices to about $91 per barrel eased concerns over India's import bill, while a weaker dollar supported the domestic currency. Investors also assessed the Reserve Bank of India's recent measures aimed at attracting foreign currency inflows. Demand for dollars from importers remained firm, but the rupee's rebound from recent lows and lower hedging costs reduced aggressive dollar buying, easing short-term pressure on the currency. Regional currencies advanced as reports of a pause in hostilities between Iran and Israel lifted risk appetite. However, investors remained cautious as elevated US Treasury yields, supported by expectations of prolonged restrictive Federal Reserve policy, could limit gains in emerging-market currencies.