Rupee extends slump to 3-month low on Iran-Israel tensions; ends at 86.74/$

Indian Rupee today: The domestic currency depreciated 27 paise to close at 86.74 against the dollar, the lowest level since March 17 this year

Indian Rupee extended its fall on Thursday to hit a three-month low as West Asia jitters deepened the risk-off sentiment among traders. 

 

The domestic currency depreciated 27 paise to close at 86.74 against the dollar, the lowest level since March 17 this year, according to Bloomberg. During the session, the currency fell as low as 86.90, taking the fall to 1.33 per cent so far this month. 

 

The currency traded weakly as rising crude oil prices and escalating Iran-Israel tensions, including renewed US pressure on Iran’s nuclear program, weighed on sentiment, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. "Additionally, the US Fed’s indication that rate cuts may be delayed by around six months supported the dollar, adding pressure on the rupee." 

 

 

Iranian Supreme Leader Ayatollah Ali Khamenei, on Wednesday, rejected US President Donald Trump’s calls for unconditional surrender. “The Americans should know that any US military intervention will undoubtedly be accompanied by irreparable damage,” Khamenei warned.

 

Trump, meanwhile, said on Wednesday that his patience with Iran had run out, with Bloomberg reporting that US officials are preparing for a possible strike on Iran in the coming days. The US military has moved some aircraft and ships from bases in the West Asia that may be vulnerable to any potential Iranian attack, according to a Reuters report. 

 

Crude oil prices remained volatile after these developments. Brent crude price was up 0.26 per cent at $76.90 per barrel, while WTI crude prices were higher by 0.69 per cent at 75.66, as of 3:30 PM IST. With uncertainty persisting, the rupee may stay under pressure in the coming days, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.  

 

Meanwhile, the dollar traded slightly higher a day after the US Federal Reserve kept the interest rates unchanged for the fourth consecutive time. However, Fed Chair Jerome Powell downgraded US growth estimates while projecting higher inflation. “The cost of the tariff has to be paid, and some of it will fall on the end consumer,” Powell said. 

 

The dollar index, which measures the greenback against a basket of six major currencies, was up 0.03 per cent at 98.93.