Rupee Slumps as Oil Surge Hits Markets
The Indian rupee dropped sharply on Monday, weakening 0.7% to 93.3950 as global oil prices surged following escalating tensions involving the U.S. and Iran. The spike in crude prices—Brent rising over 7% to above $102 per barrel—triggered broad selling pressure in Indian markets, with the Nifty 50 index falling nearly 2% and bond yields climbing.
The downturn came after the U.S. announced a blockade on Iranian maritime activity following failed peace talks, raising concerns over supply disruptions. Higher oil prices, a key risk for India as a major importer, added pressure on the rupee alongside reduced support after banks completed the unwinding of arbitrage trades.
Analysts noted that underlying challenges remain, including balance of payments pressures and weak capital inflows. Foreign investors have already pulled out over $19 billion from Indian markets since the Iran conflict began, while broader Asian currencies and equities also saw declines amid global uncertainty.
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