Noida, May 11 (APAC Media): The Indian rupee weakened sharply on Monday, falling 40 paise to close at 94.88 against the US dollar, as global crude oil prices surged following geopolitical tensions after former US President Donald Trump rejected Iran’s latest peace proposal.
Currency dealers said the domestic unit came under pressure amid a risk-off sentiment in global markets, driven by renewed uncertainty over Middle East stability and a spike in energy prices, which raised concerns over India’s import bill and inflation outlook.
Israeli Prime Minister Benjamin Netanyahu said the war with Iran is “not over”, adding that Tehran still retains significant capabilities that it possessed at the outset of the conflict. He also said Israel aims to gradually reduce U.S. military aid currently around $3.8 billion annually to “zero”, shifting from aid-based support to a long-term partnership.
On Truth Social, Trump wrote that he had reviewed Iran’s response from its “so-called representatives” and said, “I don’t like it — totally unacceptable.”
Oil surges add pressure on currencies.
Benchmark Brent crude prices climbed sharply in Asian trade after reports indicated that Trump dismissed Iran’s proposed peace framework, reigniting fears of supply disruptions in the region. Oil-importing currencies, including the Indian rupee, came under immediate pressure as higher crude prices typically widen India’s current account deficit.
Traders noted that sustained crude strength tends to increase dollar demand from oil importers, further weighing on the rupee.
Dollar demand and global risk sentiment
Forex traders said the rupee’s fall also reflected broad-based US dollar strength amid safe-haven demand. Uncertainty surrounding geopolitical developments prompted investors to move toward safer assets, strengthening the greenback.
“Risk sentiment turned negative after the developments in the Middle East, leading to higher oil prices and dollar demand from importers,” a currency dealer said.
Market implications
Analysts said the rupee remains sensitive to fluctuations in crude oil prices and geopolitical risks, given India’s heavy reliance on energy imports. Persistent volatility in oil markets could keep the currency under pressure in the near term.
Market participants will now closely watch further developments in US-Iran relations, global crude price trends, and foreign fund flows for direction.
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