Indian Rupee Plunges to Two-Week Low Amid Ongoing Oil Price Volatility
The Indian Rupee (INR) has been trading lower against the US Dollar (USD), reaching a two-week low of around 95.75. The USD/INR pair's weakness is attributed to higher oil prices, which have remained elevated due to ongoing tensions between the United States and Iran over the Strait of Hormuz.
Oil prices have been volatile in recent days, with the MCX Crude Oil contract expiring on August 19 trading 0.6% higher near Rs. 8,130. Analysts at BNY highlight that hopes for a rapid reopening of the Strait of Hormuz have faded, and US President Donald Trump has stated he will not seek to revive the expired U.S., Iran truce.
The Reserve Bank of India (RBI) has taken steps to limit the Rupee's decline by intervening in spot and Non-Deliverable Forwards (NDFs) markets. The RBI also announced an early closure of its concessional FX swap facility for Foreign Currency Non-Resident (Bank) deposits on August 31, citing stronger-than-expected take-up.