The Indian Rupee declined on Wednesday as oil prices remained unstable and domestic stocks dropped, although occasional Dollar interventions by state-owned banks helped limit its losses, according to traders.
The Rupee ended 0.2% lower at 92.04 against the US Dollar. India’s main stock indexes, the BSE Sensex and Nifty 50, each fell more than 1.5%, leading declines across Asian markets.
Oil prices climbed above $90 per barrel amid missile exchanges between the US, Israel, and Iran in the Middle East.
Three ships were struck by unidentified projectiles in the Strait of Hormuz, disrupting traffic through the crucial channel for global energy shipments, Reuters news agency reports.
Ongoing uncertainty has kept investors wary, even as extreme market fluctuations have eased following US President Donald Trump’s recent remarks suggesting the conflict could end soon.
According to Reuters on Wednesday, the International Energy Agency is recommending that over 100 million barrels of oil be released from strategic reserves in the first month.
Meanwhile, global market volatility has impacted Indian companies’ foreign exchange hedges, leading importers to increase their protections while exporters face mark-to-market losses on positions taken last month.
According to analysts, importers should continue to buy the Dollar-Rupee on dips, while exporters can secure partial hedges when the pair rises above 92.
In global markets, the Dollar index edged up to 99, while Asian currencies showed mixed movements, as investors kept a close watch on Middle East developments and awaited US consumer price inflation data scheduled for later in the day.
“This remains a headline-to-headline trading environment with all focus on assessing the length of the Iran conflict. US CPI today may have a more limited impact than usual,” according to a note by ING.