Rupee Extends Losses on Higher Oil

The Indian rupee weakened to around 95.9 per dollar, extending losses from the previous session as stalled US-Iran talks pushed oil prices higher, while rising US Treasury yields and a firmer dollar added to pressure on the currency. Brent crude climbed about 2.5% to around $107 a barrel after US President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz and end the fighting, raising concerns over prolonged supply disruptions. The 10-year US Treasury yield also rose to 5.2%, its highest level in nearly two decades, amid stronger US economic data and growing expectations of another Fed rate hike. Meanwhile, RBI intervention near the 96-per-dollar level continued to cushion the rupee, with the central bank repeatedly stepping in to prevent a sustained break above the key level.

The Indian rupee fell to around 95.8 per dollar, extending losses for another session as elevated oil prices and a stronger dollar weighed on the currency, while rising global bond yields reinforced concerns over further US rate hikes. Brent crude remained elevated amid limited progress in US-Iran talks, raising inflation concerns for energy-importing economies such as India. The dollar index held above 101, near a two-month high, as markets continued to price further Fed tightening. Higher US Treasury yields and a broad decline across Asian currencies added to the pressure, while Indian equities posted their sharpest single-day fall since early July. The rupee, however, avoided a sharper decline as the RBI likely intervened in the foreign exchange market, with traders saying state-run banks sold dollars to limit losses.

The Indian rupee hovered around 95.6 per dollar, steadying after gaining for three consecutive sessions as softer oil prices and continued RBI intervention limited downside, while traders remained cautious ahead of developments on US-Iran diplomacy. Brent crude hovered near a two-week low around $99.2 a barrel on hopes of a diplomatic resolution to the Middle East conflict, easing concerns over India’s energy import bill. State-run bank dollar sales and RBI spot intervention and FX swaps also helped contain losses. The central bank’s earlier policy measures have attracted about $133 billion through the diaspora deposit scheme, lifting FX reserves to a record high. However, foreign equity outflows remain a drag, with overseas investors selling $1.81 billion of Indian shares in September and $25.87 billion so far this year.