The Indian rupee fell 6 paise to 95.42 against the US dollar in early trade on Wednesday, August 12, weighed down by a sharp rise in Brent crude toward the $90-a-barrel mark, as hopes for a quick US-Iran agreement to reopen the Strait of Hormuz continued to fade.
How the Session Opened
At the interbank foreign exchange market, the rupee opened at 95.40 before slipping further to 95.42, down 6 paise from its previous close. That follows a similar 6-paise decline on Tuesday, when the rupee settled at 95.36 — meaning the currency has now weakened in consecutive sessions as oil-driven pressure builds.
Hormuz Uncertainty Driving Oil — and the Rupee
Forex traders pointed to continued uncertainty over the Strait of Hormuz as the principal driver behind the latest rise in crude prices. Markets have grown increasingly skeptical about a swift US-Iran agreement, while fresh reports of attacks on shipping in the strait have renewed concerns about physical oil supply. Brent crude was trading roughly 1% higher at $89.80 a barrel in futures trade, with spot levels hovering around $89.36 even as the dollar index stayed largely flat near 99.83-99.87.
Since India imports the vast majority of its crude oil needs, sustained increases in global oil prices directly raise dollar demand from domestic oil marketing companies, which weighs on the rupee. Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted that with Brent now near $90 a barrel, 95.50 becomes the immediate level to watch for the rupee, with 95.80-96.00 as further downside levels if oil prices stay elevated.
RBI Support and Market Positioning
Bhansali added that oil companies continue to buy US dollars for their daily requirements, while the Reserve Bank of India continues to support the rupee at various levels on a daily basis — a dynamic that has helped keep the rupee's declines relatively contained despite persistent external pressure. Traders described markets as largely in a wait-and-watch mode ahead of upcoming US inflation data, with the dollar receiving some support from elevated oil prices but limited by expectations that inflation may continue to moderate.
Domestic Equities Also Under Pressure
The weakness in the rupee coincided with a soft start for Indian equities, with the benchmark Sensex slipping around 36 points to 78,097.31 in early trade, reflecting broader caution in domestic markets tied to the same global crude and geopolitical concerns weighing on the currency.
A Recurring Pattern
This marks the latest in a string of sessions where Hormuz-related oil volatility has directly driven rupee movements. The rupee had earlier found the 95.00-95.10 range described as a solid support level during a period when oil was trading closer to $83 a barrel — a cushion that now looks increasingly tested as crude climbs back toward $90.
What to Watch Next
Traders will be watching incoming US inflation data, any fresh headlines on Strait of Hormuz negotiations or attacks on shipping, and the dollar index's next move for cues on where the rupee heads next. For live exchange rate tracking and RBI reference rates, see the Reserve Bank of India's official reference rate bulletin.
With oil prices once again in the driver's seat, the rupee's next moves are likely to hinge less on domestic factors and more on how the Hormuz standoff — and the US-Iran diplomatic track — evolves in the days ahead.