USD–INR Update: Will the Rupee Bounce Back Amid Oil & Geopolitical Pressure?

June 20, 2025: The Indian rupee is expected to open stronger after hitting a three-month low recently. This shift comes as Brent crude prices dropped due to eased geopolitical tensions, and the U.S. dollar softened following comments from President Trump about potential non-involvement in a Middle East escalation .

Overnight Outlook:

Non-deliverable forwards suggest an opening range of ₹86.60–86.64/USD, compared to yesterday’s close at ₹86.7225.

Brent crude is down 2%, trading near $77/barrel, while the U.S. dollar index has slipped below 99 .

Market Sentiment:

Investors see relief as oil and dollar pressures ease, though a sustained rupee rally could hinge on de-escalation in Middle East tensions.

This week, the rupee has weakened ~0.75%, marking its poorest performance in six weeks.

📉 Key Drivers

Geopolitical Tensions
Concerns over a U.S. role in the Israel‑Iran conflict previously pushed crude above $77, weighed on sentiment, and pressured the rupee.

Oil Prices
A 2% drop in Brent crude provided substantial respite for the rupee.

Currency Trends
The U.S. Dollar Index’s fall below 99 boosted Asian currencies, including the rupee.

Capital Flows
Foreign investors sold nearly $69 million in Indian equities and ~$2.8 million in bonds on June 18, adding stress to the rupee.

🧭 What’s Next?

Short-term outlook: A slightly stronger opening today (~₹86.60–86.64), supported by oil and dollar dynamics .

• Key catalyst watchlist:
  • Middle East geopolitical developments
  • Brent crude price movements
  • U.S. dollar direction
  • FII flows into Indian markets