Rupee Falls as Brent Crude Prices Rise Amid Renewed Geopolitical Tensions

The Indian rupee fell by 2 paise to close at 94.97 against the US dollar on Wednesday, marking a marginal loss. This came as foreign capital inflows were negated by weak local equities and a strong US dollar.

Forex traders pointed out that the RBI is closely monitoring the rupee's fall due to rising Brent crude prices at $95 per barrel and a strengthening US dollar index at 99.80, driven by risk aversion over US-Iran tensions.

The probability of a US Federal Reserve interest rate hike in September has also increased, pushing up US Treasury yields and sparking a broad dollar rally. The 10-year US Treasury yield rose above 4.8 per cent for the first time since January 2025 after softer-than-anticipated US economic data.

Market analysts expect the rupee to trade with a slight negative bias amid renewed geopolitical tensions, but any de-escalation of tensions could support the rupee at lower levels. Traders will be watching key data releases, including ADP non-farm payrolls and factory orders from the US.