Rupee Retreats From Over 6-Month High

The Indian rupee weakened to around 94.15 per dollar, pulling back from over six-month highs as a rebound in crude oil prices renewed pressure on the currency. Brent crude climbed toward $96 per barrel following fresh attacks on Saudi energy infrastructure and disruptions to shipping through the Strait of Hormuz, reviving concerns over India’s oil import bill and demand for the dollar. At the same time, higher US Treasury yields supported the dollar, adding to external pressure on the currency by reducing the relative attractiveness of emerging-market assets. Moreover, speculation that the Reserve Bank of India is purchasing dollars to rebuild its foreign exchange reserves, alongside renewed spot-market demand from oil companies, may be absorbing additional dollar supply and limiting the rupee’s recovery despite robust foreign equity inflows. Nevertheless, sustained foreign investment inflows continue to cushion external financing pressures.