Indian rupee logs steepest weekly drop in over three years as Iran war worries resurface
- Indian rupee closed at 94.2475 on Friday
MUMBAI: The Indian rupee declined in all five trading sessions to log its steepest week-on-week loss since September 2022, as worries over the fragility of a U.S.-Iran ceasefire and disrupted energy flows sparked a renewed surge in oil prices.
The Indian rupee closed at 94.2475 on Friday, down 1.4% on the week.
Regulatory measures by the Reserve Bank of India and optimism over an end to hostilities in the Middle East granted the rupee some breathing room last week, but it proved fleeting as oil prices resumed their upward march with hopes of peace talks ebbing and flowing.
India’s benchmark equity index, the Nifty 50, fell about 2% on the week while government bonds slipped, with the benchmark yield rising nearly 10 basis points to almost 7%.
Global markets were gripped by the uncertainty as fears of a renewed military escalation in the Middle East kept investors on edge heading into the weekend.
The war has been paused since a ceasefire on April 8. The U.S. and Iran met in Pakistan on April 11 and 12 in an attempt to end hostilities, but talks ended without agreement and a second round is yet to take place.
Brent crude oil futures were last up 2% at $107.25 per barrel.
“The ceasefire that is currently being maintained can certainly be viewed as a de-escalation from the more intense phase of the military conflict but keeping the US blockade in place essentially means the risks continue to build of a significant spike in prices,” MUFG said in a note.
Major surveys showed on Thursday that the global economy is facing ever more tangible strains from the energy shock, as factories grapple with soaring production costs and activity weakens even in services sectors.
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