The Indian rupee declined 8 paise to 95.78 against the US dollar in early trading on Wednesday, pressured by rising crude oil prices amid escalating tensions between the US and Iran, which has dampened expectations for a swift peace agreement.
Forex traders noted that the intensifying conflict in the region is fueling demand for the dollar as a safe haven. Brent crude prices remain elevated, trading around $98 per barrel, driven by geopolitical risks and instability in West Asia.
During the interbank foreign exchange session, the rupee opened at a stronger 95.60 but quickly lost ground, marking a decline from its previous close of 95.70 on Tuesday, when it had fallen by 44 paise.
“The rupee retreated as crude oil prices surged following reports of renewed US strikes on Iran, which also led to a shift in market sentiment regarding an immediate peace deal,” said Amit Pabari, Managing Director of CR Forex Advisors. He emphasized that while market players still hope for a broader resolution, ongoing military actions and delays in negotiations are creating a cautious atmosphere.
Attention now turns to the upcoming Reserve Bank of India (RBI) Monetary Policy Committee meeting scheduled for June 3-5. Analysts are divided on whether the RBI will opt for a rate hike or maintain the current rate. Pabari noted that the central bank might need to balance currency stability with inflation management, indicating that interest rates could play a role in attracting capital inflows to stabilize the rupee.
The dollar index, which measures the US dollar’s strength against a basket of six currencies, was recorded at 99.09, down 0.07 percent. Brent crude, the international oil benchmark, saw a decrease of 1.50 percent, trading at $98.09 per barrel, impacted by fresh US military actions against Iran, which overshadowed hopes for reopening the Strait of Hormuz.
In the domestic equity market, the Sensex rose 127.83 points to 76,137.53 while the Nifty increased by 36.45 points to 23,950.15. However, foreign institutional investors sold off equities worth ₹2,407.87 crore on Tuesday, according to exchange data.
Published on May 27, 2026.
