The Indian rupee has depreciated by 33 paise to 95.95 against the US dollar in early trade, tracking the US-Iran resumption of hostilities and increasing oil and energy prices along with the closure of the Strait of Hormuz.
The currency is under pressure for the second straight day, as the US launched more attacks on Iranian targets, which continued until early Tuesday morning.
Besides prevailing tensions, hawkish comments from a US Federal Reserve official pushed Treasury yields higher, a move that traders said is further denting the prospects of the Indian currency.
Additionally, Brent crude jumped to $85.64 a barrel in Asian trade, its highest level in more than a month, following the latest US military strikes on Iran and reports of attacks on tankers in the Strait of Hormuz.
After climbing almost 10 per cent on Monday, Brent is now trading at a 20 per cent premium, recovering all major losses it incurred since June 20.
The rupee had earlier recovered marginally to 94 against one US dollar after repeated stabilisation efforts from the Reserve Bank of India (RBI).
The central bank launched several measures to attract dollar inflows into the economy, improving the currency’s short-term outlook.
However, despite the attempts, the rupee continued its nose dive on the second day since trading resumed on Monday.
Investors will remain motivated and inclined towards oil, energy and defence stocks until the US and Iran brush aside the latest round of hostilities in the region and allow free and safe passage in the Strait of Hormuz.
Also read: Crude oil prices jump to $85 amid escalating Mid-East tensions
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