Rupee Opens Weaker Against Greenback As Israel-Iran Conflict Casts Monday Blues

The Indian rupee opened 15 paise weaker against the US dollar on Monday, trading at 86.74 compared to its closing rate of 86.59 on Friday, according to Bloomberg.

This decline comes amid heightened geopolitical tensions between Israel and Iran, which has cast a shadow over global markets.

The Reserve Bank of India is likely to intervene if the rupee weakens further toward 87 per dollar, Bloomberg said, citing analysts from Australia & New Zealand Banking Group Ltd. and MUFG Bank Ltd.

The Indian rupee has been the worst-hit Asian currency this quarter, largely due to surging oil prices, the report further added.

The ongoing middle eastern conflict has exacerbated the pressure on emerging-market currencies, with the rupee being particularly vulnerable due to India's status as the world's third-largest importer of crude oil. Rising oil prices are putting upward pressure on rupee.

The US dollar index rose to 99 after dipping to 98.6 on Friday, maintaining its weekly gains as the Israel-Iran conflict bolstered safe-haven demand.

Over the weekend, the US conducted strikes on Iran's nuclear sites following Israel's military operations targeting Iran's nuclear power plant sites, which led to retaliatory airstrikes by Iran on Israel. This geopolitical turmoil has significantly impacted global financial markets, including the currency exchange rates.

Brent crude, the global benchmark for crude oil, saw a 5.70% increase at intraday, reaching $81.40. This surge was driven by supply risks following Iran's warning of the potential closure of the Strait of Hormuz, a crucial passage for 20% of the world's oil supply. The escalating conflict has heightened concerns over oil supply disruptions, further influencing the rupee's performance against the US dollar.