Rupee Rebounds 50 Paise Against Dollar to Rs 91.57 Amid Escalating US-Iran Tensions

Indian Rupee Rebounds Amid Oil Price Volatility

On March 5, the Indian Rupee saw a significant rebound, regaining more than 50 paise at the open, after hitting a record low in the previous session. The currency was trading at Rs 91.57 against the US dollar, a slight recovery from its previous low of Rs 92.17.

The rupee's sharp decline on March 4, which was nearly 70 paise, led traders to speculate that the Reserve Bank of India (RBI) intervened in the spot and offshore non-deliverable forwards (NDF) market to stabilize the currency. The RBI's intervention likely prevented a more significant fall in the rupee.

Global oil prices continue to impact the rupee, with Brent crude trading at $83.61 a barrel on March 5. The closure of the Strait of Hormuz, a vital oil import corridor, due to the ongoing US-Israel and Iran conflict, has driven up oil prices by more than 10% since the conflict began.

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India, which meets almost 85% of its fuel needs through imports, is particularly vulnerable to high oil prices, which can lead to a spike in the import bill and widen the current account deficit. While short-term relief may be offered by de-escalation efforts, the broader pressures on the rupee remain firmly in place, with the Rs 91.20-Rs 91.50 zone emerging as a strong support for the USD/INR pair.