Key Highlights
- Rupee opened 7 paise weaker at 95.75 against the US dollar
- Middle East tensions continue to pressure global markets
- Iran accused the US of violating ceasefire near Strait of Hormuz
- Brent crude remained near $100 per barrel
- Foreign investors sold over $24 billion in Indian assets since March
- RBI monetary policy meeting now in focus
- Analysts expect continued volatility in the currency market
The Indian rupee opened lower against the US dollar on Wednesday as rising geopolitical tensions in the Middle East and continued foreign investor outflows kept pressure on the domestic currency.
The rupee weakened by 7 paise in early trade to open at 95.75 against the US dollar after optimism surrounding a possible ceasefire between the United States and Iran faded once again.
Middle East Conflict Impacts Market Sentiment
Investor sentiment turned cautious after Iran accused the United States of violating the ceasefire by carrying out fresh strikes near the Strait of Hormuz, one of the world’s most important oil shipping routes.
The renewed tensions raised fears that the ongoing conflict could continue for a longer period, increasing uncertainty across global financial and commodity markets.
Currency traders said the geopolitical developments are keeping oil prices elevated, which is a major concern for India because the country imports a large portion of its crude oil requirements.
High Crude Oil Prices Add Pressure
Brent crude prices remained close to the $100 per barrel mark despite slight easing during Asian trading hours. Higher oil prices typically increase India’s import bill, widen the trade deficit, and put downward pressure on the rupee.
Experts believe that prolonged high energy prices could also impact inflation and economic growth in the coming months.
Other Asian currencies, including the Indonesian rupiah and Philippine peso, also witnessed weakness amid concerns over rising global energy costs and geopolitical uncertainty.
Foreign Investors Continue Selling Indian Assets
Foreign institutional investors have reportedly withdrawn more than $24 billion from Indian equity and bond markets between March and May this year, reflecting growing global risk aversion.
Analysts say continued capital outflows are reducing support for the rupee and increasing volatility in domestic financial markets.
Economists also warn that if crude oil prices remain elevated and exports slow down, India could face additional pressure on its balance of payments position during the next financial year.
RBI Policy Meeting in Focus
Market attention is now shifting toward the upcoming Monetary Policy Committee meeting of the Reserve Bank of India scheduled for early June.
Investors are closely watching whether the central bank will maintain current interest rates or take additional measures to stabilize the currency amid global uncertainty.
Experts believe the RBI may continue intervening in the currency market to limit excessive volatility in the rupee.
Analysts Expect Key Resistance Levels Ahead
According to currency market experts, the USD-INR pair is expected to face strong resistance near the 96.20–96.40 range. However, if crude oil prices cool and global risk sentiment improves, the rupee could recover gradually in the coming weeks.
