Rupee trades near record lows as US-Iran tensions lift oil and pressure dollar demand

The Indian rupee weakened by 30 paise to 94.63 against the US dollar on Monday, pressured by a strong dollar and Middle East tensions. Despite supportive inflows and falling crude oil prices, importer demand and foreign institutional investors turning net sellers weighed on the currency. While equity markets saw gains, core sector growth slowed, and the RBI actively intervened in the forex market.

The rupee rose 0.8% last week to 94.32, its best weekly ‌performance in 11 weeks, helped by a drop in crude prices after the ​U.S.-Iran peace deal.

The Indian rupee strengthened for a second day, closing at 94.33 against the US dollar, buoyed by positive India-US trade talks. Hopes for an interim trade agreement between the two nations are rising, with negotiators urged to expedite efforts. However, global uncertainties and a stronger dollar limited the rupee's gains. Analysts anticipate continued inflows supporting the local currency.

The Indian rupee opened largely unchanged against the US dollar on Friday, starting the trading session at 94.35 per dollar compared to the previous close of 94.33. Despite the flat opening, the domestic currency has shown notable resilience in recent days.Over the past six trading sessions, the rupee has appreciated by around 1.2%, supported primarily by easing crude oil prices, which have improved sentiment toward India as a major net importer of oil. Lower oil prices typically reduce India’s import bill, easing pressure on the current account and supporting the currency.Crude Oil Prices Edge Higher As Delay In JD Vance’s Switzerland Trip Postpones Next Round Of Iran Talks The US dollar index, which tracks the greenback against a basket of global currencies, has also strengthened during the week. It moved from 99.47 at the beginning of the week to 100.91 by the end, indicating renewed dollar strength in global markets. Despite this, the rupee has managed to hold steady.On a broader monthly basis, the rupee has gained more than 2%, recovering from earlier weakness when it had touched levels near 96.57 against the US dollar. The recent stability reflects improved capital flows and better macroeconomic sentiment.Brent crude oil prices have also remained subdued, trading below the $80 per barrel mark. This has provided additional support to the rupee by limiting import-related pressure on India’s external accounts.According to a Reuters report, foreign exchange market activity is gradually shifting. Importers continue to hedge, but there has also been an increase in inflows into Indian bond markets and a slowdown in foreign equity outflows. This has led to more balanced two-way currency flows compared to earlier periods dominated by dollar demand.Previously, the rupee had faced sustained pressure due to one-sided dollar buying from importers and continuous foreign institutional outflows. However, this trend is now moderating as capital inflows improve and oil prices decline following easing geopolitical tensions between the US and Iran.Overall, rebalancing global flows, softer crude prices, and stabilising foreign investment patterns have helped the rupee regain stability in recent weeks.

The Indian Rupee strengthened significantly against the US dollar on Friday, recovering from an all-time closing low. Optimism surrounding an India-US trade agreement, coupled with improved foreign inflows and softer crude oil prices, fueled the currency's rise. Discussions between Prime Minister Modi and President Trump highlighted progress on a trade pact, with further negotiations planned.

The Indian Rupee weakened against the US dollar on Thursday, influenced by the US Federal Reserve's hawkish stance and a strengthening dollar index. Asian currencies also saw declines, impacting the rupee. Meanwhile, positive sentiment emerged from reports of a US-Iran memorandum of understanding and progress on a US-India trade agreement.