Noida, May 20 (APAC Media): The Indian rupee extended its losing streak on Wednesday, slipping to a fresh record low of 96.86 against the US dollar, as global markets reacted to a prolonged US–Iran stalemate that has kept crude oil prices elevated and intensified fears of a renewed global inflation surge.
Forex traders said the currency’s decline reflected a combination of external shocks, including rising energy costs, higher US Treasury yields, and sustained foreign investor outflows from emerging markets.
The weakness in the rupee also mirrored broad-based demand for the US dollar as a safe-haven asset amid heightened geopolitical uncertainty.
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“The rupee continues to face relentless pressure due to a perfect storm of elevated oil prices, persistent geopolitical risk and weak capital inflows,” a senior currency dealer at a private bank said, requesting anonymity. “Every uptick in crude immediately feeds into import concerns, and that translates into dollar demand.”
U.S. president Donald Trump has warned that strikes on Iran could resume within days if no agreement is reached, heightening geopolitical tensions.
Meanwhile, a hawkish repricing of Federal Reserve expectations has pushed U.S. Treasury yields to multi-month highs, lending additional support to the U.S. dollar. Investors are closely watching the upcoming Federal Reserve meeting minutes for fresh signals on the interest rate outlook.
In currency and commodity markets, the U.S. Dollar Index (DXY) is holding near 99.33, Brent crude is trading at $111 per barrel, and the 10-year U.S. Treasury yield stands at 4.67%.
“The market is pricing in a sustained inflation risk scenario globally,” said another Mumbai-based economist. “Higher oil prices are not just an India story—they are pushing bond yields higher across developed and emerging markets alike, which, in turn, strengthens the dollar.”
According to market participants, the Reserve Bank of India is believed to have intervened intermittently to smooth volatility, though such measures have not altered the broader depreciation trend.
“RBI’s interventions may slow the pace of decline, but they cannot reverse global flows,” a foreign exchange strategist said.
Equity markets also remained under pressure, with investors staying cautious amid risk-off sentiment. Analysts expect the rupee to remain sensitive to developments in West Asia, crude oil movements, and US Federal Reserve policy signals in the near term.
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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