The Indian rupee lost 15 paise against the US dollar on Wednesday morning, falling to 95.56. The currency came under pressure from rising oil prices amid a new escalation phase in the Middle East conflict.
In the interbank foreign exchange market, the dollar-rupee pair opened at 95.52. The rate then turned downward, dropping to 95.56 in early trades.
On Tuesday, the rupee had gained 20 paise against the dollar, closing at 95.41. After this short-term recovery, the currency resumed its weakening trend.
Tensions Weigh on the Currency
Traders reported that negative sentiment intensified after US President Donald Trump blamed Iran for downing an American military helicopter near the Strait of Hormuz and stated that Washington must respond to the attack.
The report noted that the US launched retaliatory strikes against Iran following the helicopter incident, while Iran’s Revolutionary Guards responded with drone and long-range missile attacks on American targets in the region.
Following these developments, Brent crude oil prices rose 0.73% to $92.12 per barrel. The US dollar index traded slightly up by 0.03% at 99.94.
Import-Dependent Economy Increases Currency Pressure
Market participants said India’s heavy reliance on energy imports means that every jump in global oil prices widens the trade deficit and weakens the local currency.
Meanwhile, Indian stock markets showed a more positive outlook at the same time. The Sensex rose 303.73 points to 74,222.49, and the Nifty increased by 85.40 points to 23,327.50.
On the other hand, institutional foreign investors sold shares worth a net 4,566.03 crore rupees on June 9. This outflow also contributed to the pressured sentiment in the foreign exchange market.
Experts warn that if the conflict in the Middle East deepens, sustained high oil prices could keep the rupee’s weakness alive for some time.
