Rupee extends decline as oil prices soar; opens 10 paise lower at 86.18/$

Indian Rupee today: The domestic currency fell 10 paise to open at 86.18 against the dollar, after closing at 85.08 on Friday

The Indian Rupee continued to remain weak on Monday as soaring crude oil prices continued to weigh on the currency. 

 

The domestic currency fell 10 paise to open at 86.18 against the dollar, after closing at 85.08 on Friday, according to Bloomberg. Other Asian currencies were mostly weaker at the start of the week, while the dollar index was little changed. 

 

Crude oil prices soared as much as 5 per cent on Monday as Israel and Iran continued attacks over the weekend. Israel launched 'Operation Rising Lion' against Iran Friday morning, attacking its nuclear facilities amid escalating tensions between the two West Asian countries. 

 

 

Benjamin Netanyahu said on Friday that Israel had “struck at the heart of Iran’s nuclear enrichment program”, as well as leading nuclear scientists and the ballistic missile program.

 

Brent crude price was up 0.84 per cent to $74.85 per barrel, while WTI crude prices were higher by 1.03 per cent at 73.73, as of 9:00 AM IST. 

 

Brent prices can touch $150 a barrel (bbl) — up a whopping 103 per cent from the current levels — in the worst-case scenario if the Israel–Iran geopolitical tensions escalate, suggest analysts. Read more 

 

The dollar index, which measures the greenback against a basket of six major currencies, was up 0.15 per cent at 98.33. In the week ahead, all eyes will be on the US Federal Reserve's rate decision along with the jobless claims data. 

 

Despite a broad-based weakening of the US dollar, the Indian rupee remained under pressure and was one of the worst-performing Asian currencies in June so far. The weakness in the local currency is primarily attributed to persistent foreign portfolio investor (FPI) outflows from debt, muted activity in the equity market, and lacklustre FDI inflows in recent months.

 

The rupee remained under pressure, hitting new lows against major currencies like the euro and pound, despite gaining nearly ₹2 against the US dollar, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. Foreign portfolio investors (FPIs) continued to sell equities and buy dollars, while oil companies also stepped up dollar purchases amid rising crude prices, he said. 

 

Tensions in West Asia remain a key concern, with Iran closing its airspace, a move that has further disrupted airline routes already impacted by Pakistan’s airspace restrictions, Bhansali said. A potential easing of tensions could bring down oil prices, but for now, markets remain cautious, he added.