Rupee Crumbles Amid Oil Price Surge and Rate Hike Fears

The Indian rupee hit a one-week low on Thursday as a surge in oil prices and increased global rate hike worries weighed down on emerging market currencies.

Oil prices rose, elevating inflation concerns in energy-importing economies and straining fiscal health. The Iran conflict has been a major contributor to this trend, with the Reserve Bank of India reportedly selling dollars through state-run banks to limit losses and keep the rupee above 96 per dollar.

The currency ended at 95.9550 per dollar, down 0.2% for the day, its lowest level since September 17. New York Federal Reserve President John Williams stated that it's reasonable to think the U.S. central bank might need to raise interest rates before the end of the year to combat inflation risks.

The increased rate hike worries have led to a surge in global bond yields, with U.S. Treasury yields hitting multi-year highs. This has put pressure on high-yielding currencies like the Indian rupee and Indonesian rupiah, both of which were under significant pressure on Thursday.