Geopolitical risks in the Middle East drive crude higher, pressuring oil-import-dependent currencies like the Indian Rupee.
The Indian Rupee traded nearly unchanged at 95.42 against the US Dollar on Wednesday, as escalating US-Iran tensions supported oil prices and clouded the outlook for oil-importing economies. The USD/INR pair remained in consolidation mode but turned bullish amid renewed hostilities in the Middle East.
Oil prices rebounded, with the MCX Crude Oil contract up 0.8% to near 8,490 after recovering from earlier losses. Currencies of oil-dependent nations, including India, typically weaken when crude prices rise due to higher import costs.
The US launched strikes on Iranian military sites near the Strait of Hormuz after Iran downed a US Apache helicopter. Iran retaliated with missile attacks on US bases in the Gulf, raising concerns over supply disruptions in a key energy transit route.