Rupee Declines 19 Paise to 95.45 Against US Dollar

Indian Rupee Weakens Against US Dollar Amid Rising Tensions in the Gulf

The Indian rupee opened 19 paise weaker at 95.45 against the US dollar on Wednesday, 3 June, due to rising crude oil prices and weakness across Asian currencies. The developments came as renewed tensions in the Gulf overshadowed diplomatic efforts between the United States and Iran. Investor sentiment deteriorated after the US military said Iranian missile attacks targeting Bahrain, Kuwait, and other regional locations were either intercepted or failed, highlighting the fragile security situation in the region.

The escalating geopolitical tensions pushed Brent crude oil prices up for a third consecutive session, with the benchmark climbing about 1% to nearly $97 per barrel. Higher oil prices are a key concern for India, which relies heavily on crude imports. Asian currencies also came under pressure, with the Indonesian rupiah falling to a record low, while other regional currencies weakened against the dollar.

The rupee was further weighed down by continued foreign portfolio investor (FPI) outflows. According to provisional exchange data, overseas investors sold more than $800 million worth of Indian equities on Tuesday. However, traders noted that the impact of persistent capital outflows and rising oil prices has been partly cushioned by the Reserve Bank of India's (RBI) regular interventions across various segments of the foreign exchange market.

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Ponmudi R, CEO of Enrich Money, noted that the USD/INR pair is showing signs of resilience above the ₹95.40 level, with the rupee giving up some of its recent gains amid a challenging technical setup and persistent geopolitical concerns. According to Ponmudi, the currency pair has found support near the lower end of its long-term ascending trendline, limiting further appreciation in the rupee. He identified the immediate resistance zone as between ₹95.60 and ₹95.70, and a sustained move above these levels could lead to further rupee weakness, pushing the pair towards ₹95.80– ₹95.90.

On the downside, Ponmudi identified ₹95.30– ₹95.20 as an important support zone, coinciding with the base of the ascending trendline. A decisive break below ₹95.00– ₹94.80 would signal a bearish shift in momentum and could trigger additional downside in the sessions ahead. Ponmudi added that the near-term outlook for USD/INR remains cautiously bullish, with dollar demand trends and ongoing geopolitical tensions continuing to influence market sentiment and currency movements.