Rupee Sinks to 95.96 Against Dollar Amid Oil Price Surge

The Indian rupee fell sharply against the US dollar on Tuesday, its largest single-day decline in two months. The rupee closed at 95.96 per US dollar, down 0.4% from the previous session's close of 95.55.

This drop was driven by rising oil prices and expectations of higher US interest rates, which weighed on the currency. Brent crude rose nearly 2% to around $107.70 a barrel after attacks on Saudi Arabian energy infrastructure left the kingdom's East-West oil pipeline offline.

The Reserve Bank of India (RBI) likely sold dollars through state-run lenders to contain losses and drain excess rupee liquidity from the banking system. However, MUFG warned that this increased rupee liquidity could add to inflation risks.