MUMBAI, July 22 (Reuters) – The Indian rupee fell to a two-month low on Wednesday as oil prices climbed on mounting fears of supply disruptions through key Middle East shipping routes, although dollar sales by state-run banks limited the local currency’s losses.
The renewed escalation in the Iran conflict has driven oil prices up more than 25% this month, leaving the rupee increasingly vulnerable as higher energy costs threaten to stoke inflation and widen India’s current account deficit.
Sign up here.
The rupee declined 0.3% on the day to end at 96.5650, drifting towards its all-time low of 96.96 hit in May.
“The Houthis’ announced maritime blockade on Saudi Arabia … would force tankers to enter and exit the Red Sea via the Suez Canal, adding significant time and expense to voyages to Asia,” analysts at ING said in a note.
A renewed rally in oil prices this month has strained the rupee even as a string of policy measures announced in June continues to buoy the outlook for India’s balance of payments for the fiscal year ending March 2027.
On Wednesday, traders said that state-run banks were offering dollars around 96.50-96.55 levels, most likely on behalf of the RBI.
Meanwhile, Indian stocks dropped about 1% while the yield on the 10-year benchmark bond drifted higher. Global markets are awaiting earnings from tech majors Alphabet and Tesla later in the day.
Reporting by Jaspreet Kalra; Editing by Ronojoy Mazumdar and Nivedita Bhattacharjee
Our Standards: The Thomson Reuters Trust Principles.
