The Indian rupee weakened for the third consecutive session on Wednesday, slipping 39 paise to settle at 93.83 (provisional) against the US dollar, edging closer to the 94 mark amid rising geopolitical tensions and surging crude oil prices.
The decline came as uncertainty surrounding potential peace talks between the United States and Iran dampened hopes of easing the ongoing West Asia conflict, pushing oil prices higher and exerting pressure on the domestic currency.
Forex traders said heavy selling in local equity markets and continued outflows of foreign capital further weighed on the rupee. At the interbank foreign exchange market, the rupee opened at 93.69 and fell to an intraday low of 93.87 against the greenback, coming close to the 94 level it had touched for the first time on March 23. It eventually closed at 93.83 (provisional), down 39 paise from its previous close.
On Tuesday, the rupee had already dropped 28 paise to settle at 93.44 against the dollar, following a 25-paise fall on Monday. This came after the currency had gained 47 paise over the preceding two sessions. According to Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, the rupee’s decline was largely driven by a sharp overnight rise in crude oil prices and lingering uncertainty over US-Iran negotiations.
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He added that the rupee is likely to trade with a negative bias due to persistent foreign institutional investor (FII) outflows, though a softer dollar could limit sharper depreciation. He projected the USD-INR spot rate to remain in the range of ₹93.60 to ₹94.20.
Meanwhile, the dollar index, which measures the strength of the US currency against a basket of six major currencies, slipped 0.07 per cent to 98.15. Global oil benchmark Brent crude rose 1.29 per cent to USD 99.75 per barrel in futures trade, reflecting heightened tensions in key shipping routes.
Analysts noted that crude prices surged after two vessels came under attack in the Strait of Hormuz on Wednesday, further complicating efforts to stabilise the situation. The developments followed the recent seizure of an Iranian container ship by the United States.
Adding to tensions, US President Donald Trump warned of military action against Iran if a peace agreement is not reached before the end of a two-week ceasefire. In an interview, he indicated readiness to resume strikes if negotiations fail.
Back home, equity markets saw sharp declines, with the BSE Sensex plunging 756.84 points (0.95 per cent) to close at 78,516.49, while the Nifty 50 dropped 198.50 points (0.81 per cent) to settle at 24,378.10. Foreign Institutional Investors (FIIs) were net sellers, offloading equities worth ₹1,918.99 crore on Tuesday, according to exchange data, further contributing to the pressure on the rupee.
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