The Indian rupee fell to its weakest point in nearly two weeks on Tuesday after oil prices increased due to reduced expectations for a U.S.-Iran agreement to halt conflict and reopen the Strait of Hormuz. Reserve Bank of India dollar sales likely helped contain the currency’s decline, according to traders. The rupee ended the session at 95.4350 per dollar, down 0.15 percent from the prior close. The concerns also weighed on stocks, with the Nifty 50 declining 0.5 percent, while the benchmark 10-year bond yield rose three basis points. India remains exposed to oil price swings because it imports about 90 percent of its crude needs. Brent crude futures gained nearly 2.5 percent to 89.90 dollars per barrel. A private bank trader noted that limited outflows aided the rupee but further oil gains could push it toward 95.80 without strong central bank action. Frequent RBI interventions have reduced volatility expectations for the dollar-rupee pair despite Middle East tensions. One-month implied volatility dropped to 4.6 percent, its lowest since late June. Attention this week turns to inflation data from India and the U.S., both scheduled for Wednesday. Analysts at DBS said stable Brent prices between 70 and 100 dollars per barrel would ease geopolitical risks and keep markets focused on data.
