Rupee Declines 7 Paise to Rs 95.75 per Dollar Amid Ongoing Iran Conflict Tensions

Rupee Falls as US-Iran Tensions Escalate

The Indian rupee depreciated by seven paise on May 27, as rising tensions between the US and Iran heightened investor concerns. The local currency was trading at Rs 95.75 per dollar, down from Rs 95.68 per dollar in the previous session.

The escalation of US-Iran tensions comes after Iran accused the US of violating a ceasefire deal by launching attacks near the Strait of Hormuz. The US has stated that it will take several days to finalize a definite ceasefire plan, casting a shadow over the prospects of a peace deal between the two countries. This development has had a significant impact on global markets, with Brent crude prices trading at a tad below $100 per barrel.

The impact of Brent crude prices on the rupee is evident, as elevated oil prices have weighed on the currency. Moreover, consistent outflows of foreign investors have further weakened the rupee. According to recent data, foreign investors have pulled out almost $24 billion from both stocks and bonds from March to May.

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The Reserve Bank of India has intermittently intervened to stabilize the rupee, but investors seem to be losing confidence. Analysts at Finrex Treasury Advisors noted that the RBI's intervention was maintaining an upward bias in the currency, but geopolitical risks in the Middle East and rising oil prices are now creating fresh headwinds.

Note: The table presents foreign investor outflows from March to May, which have weighed heavily on the rupee.