Rupee Opens at 95.38 Against US Dollar, Down 15 Paise

Indian Rupee Loses Ground as Geopolitical Tensions Escalate

The Indian rupee's three-session winning streak came to an end on Tuesday, 26 May, as it opened 15 paise lower at 95.38 against the US dollar. The decline was attributed to renewed geopolitical tensions in the Middle East, which dampened hopes of an imminent peace agreement between the United States and Iran.

Experts pointed to likely month-end dollar demand as a factor weighing on the domestic currency. Sentiment turned cautious after US forces carried out what were described as "defensive actions" in southern Iran on Monday, raising concerns about a potential escalation in the region. This increased risk premium led to Brent crude futures climbing more than 2% to $98.3 per barrel, rebounding from their lowest levels in over two weeks.

The rupee had recovered from its record low of 96.96 per dollar touched last week, aided by optimism over a possible easing of hostilities in the Middle East and dollar-selling interventions by the Reserve Bank of India, which helped stabilise the currency market. Reserve Bank of India Governor Sanjay Malhotra stated in a Monday interview that the central bank will take all necessary measures to maintain stability in the foreign exchange market.

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India's economy is also facing challenges on the energy front, with the country increasing the prices of compressed natural gas on Tuesday, following a day after state-owned fuel retailers raised prices for the fourth time in May. In light of the recent rise in petrol and diesel prices, economists at Goldman Sachs have raised their consumer inflation forecast for the fiscal year 2026-27 by 10 basis points to 5.2%. They anticipate that the Reserve Bank of India will implement two 25-basis-point rate hikes in October and December.