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The rupee on Wednesday felt the ripple effect of hardening crude oil prices, which jumped on US President Donald Trump’s comments that the “ceasefire with Iran is over”, the US launching strikes on Iran and the latter attacking a tanker from Qatar near the Strait of Hormuz. Government security (G-Sec) yields also spiked in response to the jump in crude oil prices.
India imports almost 90 per cent of its crude oil requirements. Any increase in crude oil prices has a direct impact on import bill, inflation, fiscal deficit and balance of payments.
The rupee saw its worst single-day drop in about a month, closing 60 paise down at 95.56 per dollar against previous close of 94.96. Intraday, it touched a low of 95.60 per dollar.
Brent crude oil price rose more than 3 per cent and is fast heading towards the $80 per barrel mark.
The rupee had closed 44 paise stronger on Tursday at 94.96 per dollar against the previous close of 95.40.
Dilip Parmar, Research Analyst, HDFC Securities, observed that the rupee fell the most among the Asian currencies, weighed down by a sharp rise in crude oil prices and risk-off sentiment after US President Donald Trump’s remarks about ending the ceasefire with Iran.
“Geopolitical concerns have lifted the risk premium amid heightened volatility. In the near term, USDINR is expected to face resistance at 95.80 and support at 94.95, with the bias now favouring dollar bulls,” he said.
UBS India’s Chief Economist Tanvee Gupta Jain believes RBI’s recent measures to encourage foreign currency inflows—including incentives for FCNR(B) deposits and easing of certain external borrowing norms—could potentially attract US$50–60 billion of additional inflows and stabilise the Rupee.
“That said, part of these inflows could be offset if the RBI chooses to unwind portions of its sizeable forward FX book, particularly at shorter maturities. We retain our FY27 year-end USDINR forecast of 96, reflecting persistent headwinds (including the need to attract higher net FDI inflows, risks to IT services exports from AI-driven disruptions, and possible USD strength should the Fed hike rates),” she said.
Meanwhile, yield of the benchmark 10-year G-Sec (6.94 per cent 2036 GS) hardened 7 basis points to close at 6.76 per cent against the previous close of 6.69 per cent. Price of this security dropped 49 paise to close at ₹101.24 against previous close of ₹101.73.
Published on July 8, 2026
