Indian Rupee Falls 2 Paise to 95.73 Amid Global Market Volatility

Indian Rupee Continues to Struggle as US-Iran Conflict Persists

The Indian rupee faced another challenging day on May 14, opening two paise lower and hovering near its all-time low of 95.80, hit in the previous session due to concerns over crude oil prices. Market participants remained cautious, keeping a close eye on the visit of US President Donald Trump to China, which is expected to ease some of the pressure on oil prices caused by the Iran war.

The rupee was trading at 95.73 against the dollar, a marginal decrease from the previous session's close of 95.71. The recent decline has been attributed to the prolonged US-Iran conflict, which has effectively shut the Strait of Hormuz and disrupted oil supplies.

US-China Talks May Ease Oil Pressure

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Market participants are eagerly awaiting the outcome of talks between Trump and Chinese President Xi Jinping, which are expected to focus on the West Asia conflict. A possible breakthrough could persuade Iran to strike a deal with the US, allowing the opening of the Strait of Hormuz and easing supply disruptions. Brent crude was trading near $106 a barrel, a 0.4 percent rise from the previous session.

Economists have lowered growth forecasts and raised inflation projections due to the prolonged conflict, which has hurt India's macroeconomic outlook and current account balance. The rupee has fallen more than 5 percent since the Iran war began, making it Asia's worst-performing currency this year.

Central Bank Interventions Mitigate Losses

Analysts attribute the rupee's relatively minor losses to the central bank's frequent market interventions and rare regulatory curbs. However, a durable turnaround in the rupee's bearish run is unlikely without a collapse in oil prices or a resumption in portfolio flows.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

RBI Governor Sanjay Malhotra has stated that monetary policy can look through temporary supply shocks, but the central bank may need to act if inflationary pressures become entrenched. The government may also need to raise fuel prices if the conflict drags on, which could further exacerbate the rupee's decline.

Comparison of Rupee's Performance

Note: The values are based on the given data and may not reflect the actual performance of the rupee.