Rupee Near Record Low on Oil, US Tariffs

The Indian rupee weakened to around 96.58 per dollar, hovering near record lows as a sharp surge in crude oil prices and fresh US tariff measures weighed on sentiment. Brent crude jumped more than 7% to above $100 per barrel after Yemen's Houthis attacked two Saudi oil tankers in the Red Sea, exacerbating supply concerns as trade through the Strait of Hormuz remained severely disrupted. Sentiment was further dampened after the US imposed new tariffs of 10% to 12.5% on imports from around 60 economies under a forced-labor investigation, including a 10% duty on Indian goods, fueling concerns over global trade, India's export outlook, and broader emerging-market assets. Investor focus also remained on the Reserve Bank of India, with traders watching for further intervention after state-run banks were reportedly seen selling dollars on the central bank's behalf to curb volatility and prevent the rupee from breaching record lows.

The Indian rupee hovered around 96.4 per dollar, pausing its recent slide after touching its weakest level in more than two months, though it remained under pressure from surging oil prices. Escalating tensions between the US and Iran pushed Brent crude above $96 per barrel, heightening concerns over disruptions to oil supplies and worsening the outlook for the world's third-largest oil importer. Traders also warned the rupee could face renewed depreciation should Brent climb above the $100 mark. Meanwhile, sentiment was supported by expectations that the RBI would continue to back the currency if volatility intensified, following its net sale of $6.1 billion in the foreign exchange market in May after a net $8.9 billion sale in April. Additional support came from stronger foreign inflows into Indian bonds and equities after the central bank introduced measures to attract overseas capital, while foreign exchange reserves remained sufficient to cover around 10 months of imports.

The Indian rupee hovered around 96.6 per dollar, extending losses for a third session as surging crude oil prices and a stronger dollar weighed on sentiment. Brent crude climbed above $92.50 per barrel, raising concerns over India's import bill after fresh exchanges of strikes between the US and Iran intensified fears of supply disruptions. Meanwhile, higher oil prices pushed the US 10-year Treasury yield to a two-month high of 4.64%, reinforcing expectations the Federal Reserve will keep rates higher for longer and weighing on emerging-market assets. Recent Reserve Bank of India measures have attracted strong foreign inflows and boosted foreign exchange reserves, supporting repeated intervention to defend the rupee. Banks have attracted $17.4 billion in foreign-currency deposits so far. Even so, the rupee has fallen about 2% from its June high, with investors warning that further Fed tightening could narrow India's yield advantage and push the currency toward another record low.