The Indian rupee opened 19 paise weaker at 95.45 against the US dollar on Wednesday, June 3, pressured by rising crude oil prices and by weakness across Asian currencies, as renewed tensions in the Gulf overshadowed diplomatic efforts between the United States and Iran.
Investor sentiment deteriorated after the US military said Iranian missile attacks targeting Bahrain, Kuwait and other regional locations were either intercepted or failed, highlighting the fragile security situation in the region. The developments came amid stalled peace negotiations between Washington and Tehran.
Escalating geopolitical tensions pushed Brent crude oil prices up for a third consecutive session, with the benchmark climbing about 1% to nearly $97 per barrel. Higher oil prices are a key concern for India, which relies heavily on crude imports.
Asian currencies also came under pressure, with the Indonesian rupiah falling to a record low, while other regional currencies weakened against the dollar.
The rupee was further weighed down by continued foreign portfolio investor (FPI) outflows. According to provisional exchange data, overseas investors sold more than $800 million worth of Indian equities on Tuesday.
Traders, however, noted that the impact of persistent capital outflows and rising oil prices has been partly cushioned by the Reserve Bank of India’s (RBI) regular interventions across various segments of the foreign exchange market.
