Rupee Loses Ground Amid Geopolitical Tensions and Strong Dollar

The Indian rupee experienced a marginal loss of 2 paise on Wednesday, September 2, 2026, settling at 94.97 against the US dollar. This decline was attributed to weak local equities and a strong US dollar.

Foreign capital inflows provided some support to the rupee, but their impact was negated by the aforementioned factors. The RBI is closely monitoring the situation as Brent crude prices have surged to $95 per barrel, while the dollar index hovers around 99.80 due to risk aversion triggered by US-Iran tensions.

Market participants expect a potential hike in interest rates by the US Federal Reserve in September, which could further strengthen the US dollar and push U.S. Treasury yields higher. Investor sentiment was also impacted after 10-year U.S. Treasury yields rose above 4.8% following softer-than-anticipated US economic data.

Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, predicts that the rupee may trade with a slight negative bias amid renewed geopolitical tensions and hawkish comments from Fed Chair Kevin Warsh.