Indian Rupee Opens 40 Paise Lower Against US Dollar at 94.88

Indian Rupee Weakens Against US Dollar Amid Fading Hopes of US-Iran Conflict Resolution

The Indian rupee opened 40 paise weaker at 94.88 against the US dollar on Monday, 11 May, due to a sharp rise in crude oil prices and fading hopes of a swift resolution to the US-Iran conflict. The increase in oil prices was triggered by a statement from Donald Trump, who termed Iran's response to a US peace proposal as "unacceptable" on Sunday.

Global Oil Prices Surge

Oil prices surged, with Brent crude climbing over 3% to $104.50 per barrel, following Trump's statement. According to a Reuters report, Iran's proposal called for an end to hostilities across all fronts, lifting of sanctions on Tehran, reparations, and recognition of its control over the Strait of Hormuz. These demands have added uncertainty to ongoing negotiations, putting pressure on the rupee.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

India's Foreign Exchange Reserves Remain Robust

Despite having robust foreign exchange reserves of nearly $690 billion, more than double the levels seen a decade ago, the rupee has continued to weaken over time. Market experts attribute this to India's rising structural demand for dollars, which has grown even faster than reserves. Electronics imports alone crossed $100 billion in FY25–26, second only to crude oil, highlighting the increasing dependence on dollar-intensive sectors such as smartphones, semiconductors, servers, and AI infrastructure.

Global Market Fragility

On the global front, experts said geopolitics once again underscored market fragility. While the US had proposed restarting negotiations with Iran, particularly around shipping safety in the Strait of Hormuz, initial optimism faded after Trump publicly rejected Iran's response, calling it "unacceptable." This triggered a sharp rebound in oil prices.

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

| Comparison of Global Market Indices | | --- | --- | | US Dollar Index (Before Jobs Data) | 98 | | US Dollar Index (After Jobs Data) | Below 98 |

Weaker US Dollar Despite Strong Jobs Data

Interestingly, experts noted that the US dollar weakened globally despite stronger-than-expected jobs data, with payrolls rising by 115,000 in April, well above the 62,000 expected. Typically, such data supports the dollar, but markets instead focused on broader growth concerns and easing geopolitical tensions, keeping the Dollar Index below 98 and offering some relief to emerging market currencies, including the rupee.

Support for Indian Rupee

Back home, experts also noted that the State Bank of India is scheduled to consider raising up to $2 billion via overseas bond issuances, which could support India's foreign currency liquidity and improve near-term sentiment for the rupee.

Rupee Outlook

Amit Pabari, MD, Research Team, CR Forex Advisors, expects the rupee to benefit from easing geopolitical tensions and the potential for fresh overseas inflows. From a technical standpoint, he expects the 93.50–93.80 zone to act as a strong support for the USD/INR pair. However, he cautioned that any appreciation may be limited, as lower levels could trigger dollar buying by the Reserve Bank of India (RBI), as seen earlier this year following the trade deal announcement. On the upside, Pabari noted that the 95.30–95.50 range is likely to remain a key resistance zone.