Rupee Opens Lower Against U.S. Dollar As Rising Crude Oil Prices Weigh On Sentiment

The Indian rupee opened 38 paise weaker against the U.S. dollar on July 13, as escalating geopolitical tensions in the Middle East pushed crude oil prices higher and raised concerns over India’s import bill. The domestic currency opened at 95.70 per U.S. dollar compared with the previous close of 95.32.

Higher Crude Oil Prices Pressure The Rupee

The weakness in the rupee came after Brent crude oil price climbed above $79 per barrel following fresh developments involving Iran and the Strait of Hormuz, a key global shipping route for crude supplies. Higher crude oil prices generally increase India’s import costs, putting pressure on the country’s trade balance and the domestic currency.

According to Finrex, the rupee was expected to begin the session on a weaker note amid the sharp rise in global oil prices. The brokerage said exporters should monitor any intervention by the Reserve Bank of India through dollar sales before undertaking export conversions, while importers may consider utilising any decline in the U.S. dollar for hedging requirements.

Asian Currencies Trade Mixed

Currency markets across Asia showed a mixed trend on Monday. The Indonesian rupiah emerged as the strongest regional currency with a gain of 0.35%, followed by the Chinese renminbi, which rose 0.22%, and the Taiwan dollar, up 0.19%.

Among the weaker currencies, the South Korean won declined 0.34%, while the Japanese yen slipped 0.25%. The Thai baht fell 0.21%, followed by the Singapore dollar and Malaysian ringgit, both down 0.17%. The Philippine peso also traded 0.16% lower against the U.S. dollar.

U.S. Dollar Strengthens On Safe-Haven Demand

The U.S. dollar gained versus a basket of major world currencies as investors sought safe-haven assets amid rising geopolitical uncertainty. Expectations that central banks could maintain higher interest rates for a longer period also supported the greenback.

The dollar gained 0.1% against the Japanese yen to trade at 161.92. The euro slipped 0.1% to $1.1403, while the British pound also eased 0.1% to $1.3383. The Australian dollar and New Zealand dollar each declined 0.1%, trading at $0.6942 and $0.5757, respectively.

Market Focus Remains On Oil And RBI Response

The currency dealers have to be watchful regarding the fluctuations in crude oil prices and any reaction from Reserve Bank of India. Fluctuations in the global energy market are likely to affect the rupee in the short run, while the RBI's intervention, if any, would bring down volatility in the domestic currency.