Rupee Slips Further to 93.48 Against Dollar Amid US-Iran Uncertainty and Crude Volatility

Rupee Slips Further to 93.48 Against Dollar Amid US-Iran Uncertainty and Crude Volatility​

The Indian rupee experienced a noticeable dip on Tuesday, settling at a provisional 93.48 against the US dollar. The depreciation was driven primarily by a stable American dollar and sustained volatility in crude oil prices, coupled with geopolitical uncertainties surrounding peace negotiations in West Asia.

The local currency faced pressure despite positive movement in domestic equity markets. Currency experts also pointed to the recent regulatory adjustments made by the Reserve Bank of India (RBI) concerning speculative bets, which did not adequately buoy the rupee.

Geopolitical Tensions Weaken Rupee Support​

Market analysts cited the continued uncertainty over the US-Iran talks as a key factor weighing on the Indian rupee. Adding to the downward pressure was the surge in crude oil prices.

On Tuesday, the rupee opened at 93.25 against the interbank foreign exchange market. It briefly hit an intra-day low of 93.63 before closing the session 32 paise lower than the previous day's close.

Monday saw the rupee settle with a loss of 25 paise at 93.16 against the US dollar, though it had managed to gain 47 paise over the preceding two sessions.

RBI Eases Speculative Curbs on Non-Deliverable Forwards​

In a related development, the RBI made partial revisions to directives issued earlier to curb excessive speculation in the rupee. The banking regulator partially withdrew restrictions related to non-deliverable forward markets.

Under the updated guidelines, authorized dealers can once again offer non-deliverable derivative contracts involving INR to resident or non-resident users. However, certain restrictions on related-party transactions remain mandatory for compliance. The original USD 100-million cap on net open positions remains effective.

Global Markets and Commodity Drivers Fuel Volatility​

The dollar index, which tracks the greenback against a basket of six currencies, showed strength, rising 0.19 per cent to 98.09. This robust dollar performance added to the pressure on the rupee.

Simultaneously, Brent crude, the global oil benchmark, was observed trading 0.70 per cent lower in futures at USD 94.81 per barrel. Analysts attributed the fluctuating nature of crude prices to persistent concerns regarding potential supply disruptions from the Strait of Hormuz.

Index Movements Amid Foreign Selling Pressure​

While currency faced headwinds, the domestic equity markets exhibited positive momentum. The 30-share Sensex rose 753.03 points, or 0.96 per cent, concluding at 79,273.33. The Nifty also gained ground, rising 211.75 points, or 0.87 per cent, to reach 24,576.60.

Despite the market gains, foreign institutional investors offloaded equities worth approximately Rs 1,059.93 crore on Monday, as reported by exchange data.

Outlook: Traded in a Narrow Range​

Research analysts suggested that market participants are awaiting crucial data points. They noted that traders may draw cues from anticipated US retail sales and ADP employment change data.

Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, projected that the USD-INR spot price is expected to trade within a relatively narrow range of Rs 93.30 to Rs 93.90.

The volatile currency environment is heightened by geopolitical flare-ups; for instance, Iran's chief negotiator stated that Tehran would not negotiate when faced with threats, while US President Donald Trump hinted that he was not rushing to end the conflict with Iran.