The Indian Rupee (INR) extended its decline against the US Dollar (USD) for the third consecutive trading day on Thursday, with the USD/INR pair rising to near 96.32. This depreciation is attributed to elevated crude oil prices, which have sparked renewed concerns about higher foreign outflows from India, a country heavily reliant on oil imports for its energy needs [1]. The MCX Crude Oil contract expiring on July 20 climbed 0.7% in opening trade to approximately Rs. 7,664, approaching its monthly high of Rs. 7,832 [1].
The surge in oil prices is linked to ongoing military aggression between the United States and Iran in the Middle East, which has once again disrupted global energy supply chains. The US Central Command (CENTCOM) announced another wave of strikes against Iran, aiming to keep the Strait of Hormuz—a critical chokepoint for nearly one-fifth of the world's energy supply—open [1]. US President Donald Trump stated in a Fox News interview that he would authorize strikes on Iranian bridges and power plants next week if Iran does not agree to negotiations. In response, Iran's parliamentary speaker Mohammed Bagher Ghalibaf emphasized Iran's preparedness to defend its national interests, stating, 'we must always be prepared for battle and stand firm to protect our national security and interests' [1].
On the currency front, the US Dollar gained temporary ground in Asian trading on Thursday, with the US Dollar Index (DXY) trading marginally higher near 100.52, close to its four-week low of 100.35 recorded on Wednesday. Despite this slight rebound, the US Dollar has been under pressure in the previous two trading sessions due to easing hawkish bets on the Federal Reserve [1].
A table of weekly percentage changes shows that the US Dollar strengthened by 1.03% against the Indian Rupee, while the Rupee was among the weakest performers against major currencies, declining by 1.03% versus the USD, 1.45% versus the EUR, and 2.24% versus the GBP [1].
CONCLUSION
The Indian Rupee's continued weakness is closely tied to surging oil prices and escalating geopolitical tensions in the Middle East, which have heightened concerns about India's external balances. With the US Dollar showing only a modest recovery and the Rupee underperforming against major currencies, market sentiment remains negative for the INR in the near term.