The rupee weakened by more than 96 points against the US dollar on Tuesday for the first time since late May as rising crude prices and rising geopolitical tensions in West Asia boosted demand for the safe-haven American currency.After opening at 95.95 in the interbank foreign exchange market, the domestic currency fell 48 paise to 96.16 against the US dollar in early trade. On Monday, the rupee had fallen 30 paise to close at 95.68 against the dollar.Forex dealers said the rupee came under pressure as investors shifted towards the US dollar amid rising geopolitical uncertainty, while higher crude prices raised concerns over India’s import bill.Forex traders said the rupee came under pressure due to a combination of factors – renewed geopolitical tensions pushed crude oil prices higher, while investors’ shift to safe-haven assets boosted demand for the US dollar.The US dollar index, which measures the greenback against a basket of six major currencies, was trading down 0.06% at 101.17.Global crude oil prices continued to rise as the conflict between the United States and Iran escalates, raising fears of supply disruptions through the Strait of Hormuz, one of the world’s most important oil shipping routes. Global benchmark Brent crude rose 2.02% to $84.98 a barrel in futures trade.“India being a major oil importer, higher crude prices remain negative for the rupee,” Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP, told PTI.Bhansali said rising oil import costs have increased concerns about India’s current account deficit and trade balance, putting further pressure on the domestic currency.Indian benchmark indices Sensex and Nifty also declined in early trade due to a sharp rise in crude oil prices due to a fresh surge in West Asia. The BSE Sensex fell 0.42% to 77,294.12 early on, while the Nifty 50 fell 0.64% to 24,144.60.Asian stock markets also declined as investors reacted to escalating military action in the Middle East and weakness in technology stocks.Japan’s Nikkei 225 fell 1%, while South Korea’s Kospi dropped 3.2%. China’s Shanghai Composite dropped 0.8%, while data showed exports jumped 27% in June from a year earlier on strong demand for artificial intelligence-related technology. Hong Kong’s Hang Seng rose 0.1%, while Australia’s S&P/ASX 200 slipped 0.5%.Oil prices climbed after the United States launched fresh attacks on Iran and President Donald Trump announced Washington was “reinstating” the blockade on Iran in the Strait of Hormuz. Renewed fighting has disrupted tanker movements through the vital waterway, raising fears of global oil supply shortages and higher fuel prices.
