The Indian rupee weakened in early trading amid rising Brent crude prices and escalating tensions in the Middle East, reigniting concerns over supply disruptions and currency volatility.
The Indian rupee slipped in early trade on Wednesday as a jump in Brent crude added pressure to the currency and revived concern over supply risks in the Middle East. The rupee opened at 95.40 to the dollar and eased to 95.42, extending Tuesday’s 6 paise decline, as traders focused on oil markets and the outlook for the Strait of Hormuz.
According to forex traders, the latest move in Brent reflects growing uncertainty over whether a quick US-Iran agreement is possible and whether shipping through the waterway can return to normal without further disruption. Reuters reported that Brent was trading near $89.80 a barrel, while reports of attacks on shipping have fed worries about physical supply. The BBC has also reported that tensions around the strait have escalated, keeping markets on edge.
Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said the immediate level to watch is 95.50 to the dollar, with 95.80 to 96.00 likely if oil prices stay elevated. He added that oil companies continue to buy dollars for daily needs and that the Reserve Bank of India is supporting the rupee at different levels. Bhansali also said markets are waiting for US inflation data, with the dollar getting some support from higher oil prices but limited by expectations that inflation may continue to ease.
Indian equities were slightly weaker in early trade, with the Sensex down 35.99 points at 78,097.31 and the Nifty off 31.15 points at 24,444.55. Exchange data showed foreign institutional investors bought shares worth Rs 258.55 crore on a net basis on Tuesday, suggesting overseas flows remained positive even as currency and oil markets turned more cautious.
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