The Indian rupee experienced a significant reversal on Monday, nearly erasing gains from the previous session, as rising oil prices, weak risk appetite, and inconsistent corporate flows put pressure on the currency.
Following a series of measures designed to stabilize the rupee amid the ongoing Iran conflict, the currency witnessed its strongest performance in two months on Friday. However, the benefits were offset by escalating crude prices and renewed speculation regarding a potential interest rate hike by the Federal Reserve.
The rupee closed down 0.8%, marking its sharpest decline in four weeks, to settle at 95.7075 per dollar. Analysts indicate that initiatives to attract dollars could result in an influx ranging from $30 billion to $50 billion.
“The RBI has provided substantial support to the rupee, but external factors will remain critical. Any escalation in U.S.-Iran tensions, which could lead to a stronger dollar or higher oil prices, may temporarily drive the exchange rate higher,” said Amit Pabari, managing director at FX advisory firm CR Forex.
Brent crude oil prices surged over 4% following Israeli airstrikes on Lebanon, despite an ongoing truce, raising concerns about regional stability and delaying the anticipated resumption of shipping through the Strait of Hormuz.
This spike in oil prices has highlighted external risks for the rupee, particularly due to India’s heavy reliance on imports and the currency’s sensitivity to fluctuations in energy costs. Higher crude prices tend to increase India’s import bill, strain the current account, and elevate demand for dollars from oil-importing companies.
Recent stronger-than-expected U.S. jobs data has bolstered expectations that the Federal Reserve might raise interest rates before the end of the year, further pressuring the rupee as Treasury yields rise. Elevated U.S. yields typically favor the dollar and place downward pressure on emerging-market currencies due to diminishing relative appeal for local assets.
Despite some speculative selling of dollars earlier in the day, the currency was weighed down by corporate outflows, according to traders.
Published on June 8, 2026.
