Rupee Faces Slump as Global Tensions and Dollar Pull Push It Down

The Indian rupee is likely to start the day weaker, as a calm risk appetite and strong dollar demand from investors pull it down. Market watchers see the currency opening around 95. 40 to 95. 44 per dollar, after trading at 95. 35 the day before. Last week, the Reserve Bank of India (RBI) introduced measures to attract foreign money, giving the rupee a brief lift. Since then, the currency has stalled, staying only about 0. 2% above its pre‑policy level, showing that the RBI’s actions have not yet taken firm hold. Investors in Indian stocks have sold more than $6 billion worth of shares this month, a figure that tops the total outflows seen last month. These sell‑offs add to the pressure on the rupee, especially when importers continue to buy dollars for overseas payments. A bank trader noted that the RBI’s policy has lowered the expected range for USD/INR, hinting at a possible drop to between 93 and 94.However, lingering factors such as rising oil prices, hedging activity and continued equity outflows keep the rupee in a precarious position. Asian stocks fell along with U. S. futures, and most regional currencies weakened. Oil prices have climbed as tensions in the Middle East intensify, dampening risk‑seeking sentiment worldwide. The United States recently carried out air strikes on Iran after a U. S. helicopter was reportedly shot down in the Strait of Hormuz, adding to instability around an already fragile ceasefire. U. S. inflation data for May is expected later today, amid expectations that the Federal Reserve will raise interest rates this year. Markets now anticipate a 25‑basis‑point increase in December, a sharp change from earlier hopes of two rate cuts. These global developments combine to create a challenging environment for the rupee, which must navigate both domestic policy signals and international market forces.