The Indian rupee opened 40 paise weaker at 94.88 against the US dollar on Monday, 11 May, pressured by a sharp rise in crude oil prices amid fading hopes of a swift resolution to the US-Iran conflict.
Oil prices surged, with Brent crude climbing over 3% to $104.50 per barrel, after Donald Trump termed Iran’s response to a US peace proposal as “unacceptable” on Sunday.
According to a Reuters report, Iran’s proposal called for an end to hostilities across all fronts, lifting of sanctions on Tehran, reparations, and recognition of its control over the Strait of Hormuz—demands that have added uncertainty to ongoing negotiations.
According to market experts, India’s foreign exchange reserves remain robust at nearly $690 billion, more than double the levels seen a decade ago. However, despite this cushion, the rupee has continued to weaken over time.
Analysts point out that this is largely due to India’s rising structural demand for dollars, which has grown even faster than reserves. Electronics imports alone crossed $100 billion in FY25–26, second only to crude oil, highlighting the increasing dependence on dollar-intensive sectors such as smartphones, semiconductors, servers, and AI infrastructure. Experts note that as India’s economy expands, its requirement for dollars to sustain growth also rises.
On the global front, experts said geopolitics once again underscored market fragility. While the US had proposed restarting negotiations with Iran—particularly around shipping safety in the Strait of Hormuz—initial optimism faded after Donald Trump publicly rejected Iran’s response, calling it “unacceptable.” This triggered a sharp rebound in oil prices.
Interestingly, experts noted that the US dollar weakened globally despite stronger-than-expected jobs data, with payrolls rising by 115,000 in April, well above the 62,000 expected. Typically, such data supports the dollar, but markets instead focused on broader growth concerns and easing geopolitical tensions, keeping the Dollar Index below 98 and offering some relief to emerging market currencies, including the rupee.
Back home, experts also noted that the State Bank of India is scheduled to consider raising up to $2 billion via overseas bond issuances, which could support India’s foreign currency liquidity and improve near-term sentiment for the rupee.
Rupee Outlook
Amit Pabari, MD, Research Team, CR Forex Advisors, said easing geopolitical tensions and the potential for fresh overseas inflows are supportive factors for the rupee in the near term.
From a technical standpoint, he expects the 93.50–93.80 zone to act as a strong support for the USD/INR pair. However, he cautioned that any appreciation may be limited, as lower levels could trigger dollar buying by the Reserve Bank of India (RBI), as seen earlier this year following the trade deal announcement.
On the upside, Pabari noted that the 95.30–95.50 range is likely to remain a key resistance zone.
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