Geopolitical Heat, Rising Oil Prices Push Rupee Lower to 96.44 Against US Dollar

The Indian rupee declined 14 paise to 96.44 (provisional) against the US dollar on Monday, pressured by heightened risk aversion in global markets, rising crude oil prices, and concerns over escalating geopolitical tensions between the US and Iran.

At the interbank foreign exchange market, the rupee opened at 96.53 per dollar and moved in a narrow range of 96.35 to 96.53 during the trading session. The domestic currency eventually settled at 96.44, compared with Friday’s close of 96.30, when it had gained 12 paise against the greenback. Forex analysts said the rupee remained under pressure due to a combination of geopolitical uncertainty, elevated crude prices, and strengthening US Treasury yields. Rising tensions in West Asia have increased concerns over global energy supplies, pushing investors towards safer assets and weighing on emerging market currencies.

“We expect the rupee to trade with a negative bias on escalating conflict between the US and Iran and elevated crude oil prices. However, diplomatic talks between the two nations may prevent a sharp fall,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan. He added that possible intervention by the Reserve Bank of India (RBI) could provide support to the currency at lower levels.

According to Dilip Parmar, Senior Research Analyst at HDFC Securities, the recent rise in Brent crude prices due to geopolitical tensions has pressured currencies such as the Indian rupee. However, anticipated RBI measures have helped limit the currency’s downside. The USD-INR pair faces resistance near 96.50, while support remains around 95.80, he noted. Meanwhile, the dollar index rose 0.05 per cent to 100.81, indicating continued strength in the US currency. Brent crude, the global oil benchmark, traded slightly higher at USD 88.11 per barrel amid concerns over a wider regional conflict following fresh US airstrikes on Iran and retaliatory threats.

Domestic equity markets also witnessed selling pressure, with the Sensex falling 442.93 points to 77,708.52 and the Nifty declining 95.80 points to 24,238.50. Foreign Institutional Investors sold equities worth Rs 376.41 crore on a net basis on Friday. Despite currency market pressure, India’s foreign exchange reserves remained strong, rising by USD 964 million to USD 675.157 billion in the week ended July 10, according to Reserve Bank data.