Rupee Falls to Over Four-Week Low

The Indian rupee weakened to 95.7 per dollar, retreating from recent gains to its lowest level in over four weeks, as renewed tensions in the Middle East sent crude oil prices sharply higher. Sentiment deteriorated amid renewed concerns over India's trade balance after Iran expanded its attacks to Qatar and the UAE following fresh US strikes on Iran. US President Donald Trump declared that the ceasefire was over, fueling fears of further supply disruptions. Brent crude surged more than 4% to $79.28 per barrel, increasing pressure on the rupee. Investors also monitored the Reserve Bank of India's response, with market participants expecting the central bank to continue supporting the currency through dollar sales as higher oil prices threaten to fuel inflation. Meanwhile, traders closely watched the impact of rising oil-driven inflation concerns on US Treasury yields as markets assessed the implications of the latest strikes and counter-strikes on global energy supplies.

The Indian rupee strengthened to around 95.2 per dollar, recovering from recent declines as dollar sales by the Reserve Bank of India through state-run banks and a modest pullback in crude oil prices supported the currency. Brent crude eased to about $77.5 per barrel after markets assessed the impact of renewed US strikes on Iran, helping lift domestic sentiment. The rupee also found support from the RBI's recent measures to attract dollar inflows, which eased expectations of sustained depreciation. Reflecting this shift, corporate FX hedging hit a record $120 billion in June, with exporters raising hedge bookings to $46.3 billion and importers purchasing nearly $74 billion. Analysts expect the RBI's measures to bring in $40 billion to $80 billion in additional dollar inflows, strengthening its capacity to support the rupee. Although volatility has picked up amid Middle East tensions, expectations of persistent rupee weakness have eased, curbing one-way bearish bets on the rupee.

The Indian rupee weakened to around 95.1 per dollar, retreating after a brief stabilization as renewed Middle East tensions lifted global oil prices and strengthened the US dollar. Brent crude climbed above $76 per barrel after rising 2.6%, extending the previous session's 3% surge, raising concerns over India's import bill and inflation outlook. Market sentiment deteriorated after the US launched fresh strikes on Iran and revoked a license permitting Iranian oil sales following attacks on three tankers in the Strait of Hormuz. Meanwhile, the yield on the 10-year US Treasury note rose to 4.565%, the highest in nearly a month, as higher energy prices fueled inflation concerns, while the US Dollar Index edged above 101, adding pressure on emerging-market currencies. Earlier, the currency had posted its strongest daily gain in over three weeks after dollar sales in the non-deliverable forwards market, though it had still fallen about 1% over the previous week.