The dollar index also moved above 101, putting additional pressure on emerging-market currencies.
Why the rupee is under pressureFresh concerns over tensions in the West Asia triggered a rise in oil prices, which is negative for the rupee because India imports most of its crude oil requirements. A stronger dollar and higher US bond yields also tend to draw money away from emerging markets.
Market participants said the rupee’s recent recovery looked fragile as attention shifted back to oil-related risks.
What happened on Tuesday?
The rupee had posted its best single-day gain in more than three weeks on Tuesday (July 7), helped by dollar selling in the non-deliverable forwards market. Before that rebound, the currency had fallen about 1% in a little over a week.What analysts are watching
“Any negative surprise on the US-Iran front that pushes crude prices higher could have a significant impact on the rupee,” forex advisory firm CR Forex said.
The firm added that the rupee could potentially move toward the 95.80-96.00 range if oil-related risks intensify.
Global backdrop
According to market reports, the United States carried out a fresh wave of strikes against Iran and revoked a licence that had allowed Iran to sell oil. The developments came after three tankers were reportedly hit by projectiles in the Strait of Hormuz, adding pressure to an already fragile ceasefire.
ING Bank said the licence revocation may not immediately alter oil market fundamentals, but it could worsen market sentiment by increasing concerns about a possible breakdown in the temporary US-Iran understanding.
-With Reuters inputs
