INR weakens to all-time lows against USD amid stalled US-Iran talks and rising oil prices, pressuring import-dependent India.
The Indian Rupee fell to a new record low against the US dollar this week, driven by persistent US-Iran tensions and a rebound in oil prices. The lack of progress in negotiations has kept geopolitical risks elevated, weighing on the INR as India remains a major oil importer.
Earlier, the USD regained strength after US inflation data exceeded expectations, reducing bets on near-term Federal Reserve rate cuts. Policymakers have signaled a shift away from an easing bias, with some even discussing potential rate hikes if inflation persists. The Fed’s 2% target remains elusive, adding to uncertainty.
Market focus now shifts to the potential reopening of the Strait of Hormuz, which could ease oil prices and inflation concerns. However, if tensions escalate further, the Fed may adopt a hawkish stance, supporting the USD and pressuring emerging market currencies like the INR.