Israel-Iran Tensions: The Indian rupee is expected to weaken past the 86 per U.S. dollar mark on Friday, driven by a sharp spike in oil prices and escalating geopolitical tensions in the Middle East. A Reuters report suggests that the 1-month non-deliverable forward (NDF) indicated an opening in the 86.02–86.10 range, compared to 85.60 in the previous session.
This plunge comes after Israel launched airstrikes on Iranian targets, including suspected nuclear and missile facilities. Israel warned that this was the start of a broader campaign to prevent Iran from developing nuclear weapons, further rattling global markets.
Brent crude prices soared over 11%, nearing $77.20 per barrel, marking its biggest single-day jump in more than three years. Meanwhile, U.S. equity futures fell 1.8%, and global investors rushed to safe-haven assets like the Japanese yen and Swiss franc. The dollar index climbed back to 98.05, reflecting stronger demand amid rising uncertainty.
A Mumbai-based currency trader said the main concern isn’t just the current spike in oil but the risk of a prolonged rally if regional tensions escalate. “Defending the 86.00 level will be tough,” he warned.
Economists say a $10 per barrel jump in oil prices could widen India’s current account deficit by 0.4% of GDP and push consumer inflation up by as much as 35 basis points.
Adding to the pressure, foreign investors pulled out $15.4 million from Indian equities and $296 million from bonds on June 11, according to NSDL data.
With markets on edge, analysts believe further escalation could hit risk appetite hard, keeping the rupee vulnerable in the near term. The next few days will be critical as traders monitor geopolitical developments and energy prices closely.
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