The Indian rupee recovered sharply on Thursday, strengthening by nearly 50 paise to ₹91.57 against the US dollar, after the currency had slipped to record lows in the previous session amid heightened geopolitical tensions and volatility in global oil markets.
Traders said the Reserve Bank of India (RBI) likely intervened in both the spot and non-deliverable forward (NDF) markets to prevent a sharper fall in the currency. The intervention came after the rupee had come under significant pressure due to escalating tensions between the United States and Iran.
On Wednesday, the rupee had fallen to an intraday low of ₹93.31 and eventually closed at a record low of ₹92.15 per dollar, as uncertainty surrounding the conflict weighed on emerging market currencies. Market participants noted that the RBI was seen selling dollars near the ₹92.30 levels to stabilise the currency.
The ongoing conflict between the US and Iran has intensified concerns about global energy supplies, particularly as shipping routes through the Strait of Hormuz remain vulnerable. The strait is one of the world’s most critical energy corridors, and disruptions there have raised fears over oil supply and transportation costs.
Crude oil prices, which had briefly eased to around $80 per barrel overnight, rebounded sharply to nearly $83.50 per barrel, approaching their highest levels in about one-and-a-half years.
For India, the situation presents a significant challenge as the country imports nearly 90% of its crude oil requirements. The combined impact of rising crude prices, higher shipping costs, and potential supply disruptions through the Strait of Hormuz has added pressure on the currency and financial markets.
Market participants also noted that Russia has reportedly proposed supplying oil to compensate for potential shortfalls from West Asian producers. However, analysts warned that accepting such proposals could trigger geopolitical complications, including the possibility of higher tariffs or trade measures from the United States.
The sharp volatility in the rupee and domestic equity markets has been largely attributed to concerns over energy supply disruptions and trade flows, particularly as shipping movements in the Gulf region have slowed amid the escalating conflict.