Rupee Closes Weaker For Second Consecutive Session As Iran-Israel Tensions Mount
The Indian rupee closed 49 paise weaker at 86.09 against the US dollar on Friday in comparison to its previous close of 85.60 on Thursday. This comes amid various global and domestic economic factors influencing the currency markets.
The domestic currency opened 55 paise weaker at 86.15 against the US dollar. This is the lowest level since April 11.
"The Indian Rupee tumbled to an 8-week low on Friday morning trade amid rising geopolitical tensions, rising crude oil and trade uncertainty, although Dollar sales from the RBI capped further losses," said Sriram Iyer, Senior Research Analyst at Reliance Securities.
According to Ritesh Bhanshali, director, Mecklai Financial Service Ltd., the domestic currency was under pressure by corporate dollar demand and portfolio outflows, despite broad-based dollar weakness.
Rupee will face resistance at 85.80 and 86.10 with support at 85.30 and 85, said Bhanshali.
Additionally, the US dollar weakened to 98.08 on Friday as Israel hit dozens of Iranian Nuclear sites.
Geopolitical tensions rose after Israel attacked Iran's strategic location which caused the death of several commanders and scientists.
Israel has declared a state of emergency on anticipation of a retaliatory attack from Iran. Iran's Supreme Leader Ayatollah Ali Khamenei said that they country will respond, as reported by Bloomberg.
Oil and gold surged in response—WTI crude rose over 8% to above $75, while gold extended gains to near five-month highs at $3,425—as market participants fled to traditional hedges, added Bhanshali.
"Risk assets remain sensitive to both evolving Fed expectations and geopolitical headlines, with US consumer sentiment data and further Middle East developments set to drive near-term direction," he added.
In the last two months crude prices have tumbled to four year low amid US President Donald Trump's tariff wars. While it may have recovered some of the losses, it still remains lower this year as trade conflicts persist and OPEC+ has abandoned the earlier strategy of defending higher prices by curbing output.
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