Rupee Falls on Tensions, Higher Oil Prices, Rate Hike Expectations

The Indian rupee fell to 94.97 against the US dollar in early trade on Wednesday, September 2, due to renewed tensions between the US and Iran, higher oil prices, and rising Treasury yields.

Forex traders said the RBI is monitoring the situation closely as Brent crude prices have risen to $95 per barrel, while the dollar index hovers around 99.70 due to risk aversion caused by the ongoing conflict.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted that the dollar continues to benefit from its safe-haven status and the surge in Brent crude prices has lifted expectations of a September Fed rate hike, providing additional support to the dollar.