Rupee Slips to 94.67 as Brent Crude Reclaims $101 Amid US-Iran Tensions

MUMBAI — The Indian Rupee faced intense selling pressure on Friday morning, depreciating by 45 paise to a low of 94.67 against the US Dollar. The currency’s decline coincided with a volatile morning for Indian equities, as the Sensex shed over 353 points and the Nifty slipped below the 24,230 mark.

The primary driver of the market turbulence is a renewed flare-up in the Persian Gulf, which has sent global oil benchmarks back above the psychological threshold of $100 per barrel.

The “Ceasefire” Conflict

While US President Donald Trump maintains that the month-old ceasefire remains in effect, reports of retaliatory strikes between US and Iranian forces near the Strait of Hormuz have unnerved global investors.

• Market Reaction: Brent crude, which had recently dipped to $98 on hopes of a peace deal, surged by over 2% in Asian trade to hit $101.14.
• The Accusation: Tehran has accused Washington of violating the truce with attacks on civilian areas and shipping routes, while the US characterizes the strikes as defensive measures.

Impact on the Rupee and Economy

The Rupee opened at 94.58 but quickly lost momentum as the Dollar Index—which measures the greenback against a basket of six major currencies—climbed to 98.20.

A stronger dollar and surging oil prices create a “double whammy” for India:

1. Import Bills: As a major oil importer, higher Brent prices increase India’s trade deficit.
2. Inflationary Pressure: A weaker rupee makes essential imports more expensive, potentially driving up domestic inflation.
3. FII Outflows: Foreign Institutional Investors remain cautious, having offloaded equities worth ₹340.89 crore in the previous session.

Market Snapshot (Early Trade, May 8)

Analyst View

“The rise in oil prices took USD/INR higher this morning,” noted Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors. He highlighted that despite diplomatic insistence on a ceasefire, the physical exchange of fire near critical shipping lanes is forcing traders into a defensive posture, favoring the dollar over emerging market currencies.