Indian Rupee Falls 27 Paise to 91.25 Against US Dollar as Middle East Conflict Escalates

Indian Rupee Falls 27 Paise to 91.25 Against US Dollar as Middle East Conflict Escalates​

Rupee Opens Weaker Amid Global Risk Aversion​

The Indian rupee opened 27 paise lower on Monday at 91.25 against the US dollar, reflecting heightened risk aversion across global markets after fresh geopolitical tensions erupted in the Middle East.

The domestic currency came under pressure after the United States and Israel launched air strikes on Iran over the weekend, raising fears of a prolonged regional conflict and triggering a sharp surge in crude oil prices.

Strikes on Iran Intensify Regional Tensions​

The strikes reportedly led to the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei. In response, Iran launched missile barrages across the region, escalating hostilities.

US President Donald Trump told the Daily Mail that the conflict could continue for another four weeks. In a separate post on social media, he stated that attacks would persist until US objectives were achieved.

Oil Prices Surge as Strait of Hormuz Closed​

The escalation pushed investors toward safe-haven assets such as gold, while crude oil prices climbed to their highest levels in over a year. Iran announced the closure of navigation through the Strait of Hormuz, a critical oil export corridor that accounts for about one-fifth of global oil consumption. The move has intensified concerns over supply disruptions.

Higher crude oil prices are typically negative for oil-importing economies such as India, as they increase import bills and widen the current account deficit.

Asian Currencies Decline, Dollar Index Slips​

Asian currencies weakened between 0.2 percent and 0.6 percent on Monday, reflecting broader caution in emerging markets. MSCI’s gauge of Asia-Pacific equities dropped 1.5 percent.

Meanwhile, the dollar index declined 0.2 percent to 97.9.

Michael Wan, senior currency analyst at MUFG, said in a note that sustained increases in oil prices could make currencies such as the South Korean won, Indian rupee, and Philippine peso more vulnerable due to their exposure to oil imports.

RBI Intervention in Focus​

Market participants expect the Reserve Bank of India to step in if the rupee faces excessive volatility. Earlier this year, the domestic currency had touched an all-time low of 91.9875 against the dollar.

The rupee’s movement remains closely tied to developments in the Middle East conflict and fluctuations in global crude oil prices, with investors closely monitoring further geopolitical and policy signals.