The Indian rupee opened lower on Wednesday, reversing a portion of the gains recorded in the previous session as a sharp spike in crude oil prices following fresh US–Iran strikes weighed heavily on market sentiment. The domestic currency opened at 96.34 per US dollar, down 10 paise from Tuesday’s close of 96.24. In the preceding session, the rupee had strengthened by 20 paise to hit its highest level in two weeks, buoyed by foreign capital inflows following recent support measures announced by the Reserve Bank of India.
Market participants noted that central bank interventions around the 96.50 per dollar mark have played a crucial role in curbing excessive volatility. Traders generally expect the RBI to intervene again if the currency nears its record low of 96.96 against the greenback. Currency analysts attributed the short-lived recovery largely to position adjustments and fresh inflow developments, which temporarily bolstered market confidence. Economists added that sustained inflows should bolster India’s foreign exchange reserves, handing the central bank greater leeway to smooth out sharp currency fluctuations.
However, the rupee's momentum faced immediate pressure as global oil prices surged on the back of escalating geopolitical conflict in West Asia. Brent crude climbed past $92.50 a barrel to hit a six-week high, driven by mounting fears of supply disruptions after US forces carried out strikes on Iranian military assets and Kuwait reported incoming drone attacks. Higher energy prices pose a significant hurdle for the rupee given India's heavy reliance on crude imports, as sustained cost increases risk broadening the trade deficit and driving up dollar demand among domestic oil importers. Heightened geopolitical anxiety has also nudged US Treasury yields higher, with the 10-year yield touching 4.64 per cent — its highest point in two months — further enhancing the appeal of dollar-denominated assets.
Also read: Rupee depreciates 5 paise to 96.41 against US dollar
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