Noida, May 12 (APAC Media): The Indian rupee tumbled to a record low of 95.55 against the U.S. dollar on Tuesday as rising tensions surrounding the fragile U.S.-Iran ceasefire drove crude oil prices sharply higher, intensifying pressure on emerging market currencies.
The rupee weakened nearly 0.2% in early trade, surpassing its previous all-time low amid fears that renewed geopolitical instability in West Asia could disrupt global oil supplies and fuel inflationary pressures in oil-importing nations like India.
“Markets are reacting to the possibility that the ceasefire may not hold,” said a Mumbai-based forex dealer at a private bank. “Any escalation in the Middle East immediately translates into higher crude prices, and that has a direct negative impact on the rupee.”
Brent crude climbed above $105 per barrel, extending recent gains after reports indicated growing strains between Washington and Tehran despite diplomatic efforts to preserve the truce.
“The rupee is facing a double blow from elevated oil prices and persistent dollar demand,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors. “Importers are actively buying dollars while exporters are holding back, expecting further depreciation.”
The U.S. dollar also remained firm against major global currencies as investors shifted towards safe-haven assets amid mounting geopolitical uncertainty.
Foreign institutional investors continued to pare exposure to Indian equities, adding to pressure on the domestic currency. Equity benchmarks Sensex and Nifty traded lower during the session, led by losses in banking and technology shares.
“Risk sentiment has deteriorated globally,” said a currency strategist at a state-run bank. “If crude prices remain elevated, the RBI could be forced to intervene more actively to curb excessive volatility in the rupee.”
Traders said the Reserve Bank of India was likely monitoring currency markets closely and may intervene through state-run banks to smooth volatility, although no official confirmation was available.
Analysts warned that continued weakness in the rupee could increase imported inflation risks and complicate the central bank’s monetary policy outlook in the coming months.
NEWS AGENCY INPUTS
Disclaimer: Views expressed are those of experts and do not reflect APAC Media. This is for informational purposes only, not financial advice. We are not responsible for investment decisions. Please consult a qualified financial advisor before investing.
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