The Indian rupee opened 37 paise weaker at 95.32 against the US dollar on Monday, 8 June, as rising geopolitical tensions, higher crude oil prices and a sharp selloff in global equities weighed on sentiment, partially offsetting recent support from RBI measures aimed at boosting capital inflows.
Market participants said the Reserve Bank of India’s recent initiatives have improved the near-term outlook for the rupee, with economists estimating that the measures could attract $30-50 billion in capital inflows by March 2027. According to currency traders, the steps have helped change the narrative around the rupee, easing concerns over a deeper depreciation.
However, the currency remains vulnerable to movements in oil prices. Traders noted that any further appreciation towards the 93-per-dollar level would largely depend on crude oil trends.
Crude prices surged after Israel launched fresh strikes on Lebanon despite an existing truce, dampening hopes of a broader de-escalation in the Middle East and a potential resumption of shipping through the Strait of Hormuz. The renewed tensions have also complicated prospects of a US-Iran agreement, with Tehran reportedly linking any deal to a ceasefire in Lebanon.
Reflecting these concerns, Brent crude jumped 3.5% to $96.36 per barrel, intensifying worries for oil-importing economies such as India.
The rupee also faced pressure from a broader risk-off move across global markets. Asian equities fell sharply as investors retreated from the AI-led technology rally, following a steep decline on Wall Street. South Korea’s benchmark index plunged nearly 7%, while the Nasdaq had slumped more than 4% on Friday, triggering weakness across regional markets and boosting demand for the US dollar as a safe-haven asset.
(more to come)