Currency traders are closely watching whether the rupee will breach the 94 mark against the US dollar this week, as fresh geopolitical tensions escalate following US President Donald Trump’s ultimatum
to Iran to reopen the Strait of Hormuz, raising fears of supply disruptions in global energy markets.
The rupee closed at a record low of 93.71 per dollar on Friday, with its near-term trajectory expected to hinge on crude oil prices and shipping activity through the critical West Asia chokepoint. Market participants will also be alert to any intervention by the Reserve Bank of India in both onshore and offshore markets when trading resumes.
Experts warn that if crude prices remain elevated—especially above $100 per barrel—the rupee could weaken further to the 94–95 range over the next one to two weeks.
A treasury head at a large private bank said the breach of the 93.50 level signals further downside risk. He added that RBI intervention could help stabilise the currency in the 92.50–93.50 range, but any escalation in tensions could push the rupee past 94 per dollar. The official declined to be named, citing the fluid geopolitical situation, and noted that predicting exact levels in such conditions remains highly uncertain.
Over the weekend, Trump warned of potential strikes on Iran’s power infrastructure if Tehran does not comply within 48 hours—just a day after signalling a possible de-escalation—adding to market volatility.
Karur Vysya Bank’s treasury head V R C Reddy said the situation remains highly dynamic, with fresh developments emerging frequently. He expects RBI intervention to manage volatility, but cautioned that a further escalation could drive the rupee beyond 94 per dollar.
The rupee has already depreciated nearly 3% since the onset of the Iran conflict and is down 8.7% so far this fiscal year.
Market sentiment continues to shift rapidly in response to geopolitical developments, including statements from US and Iranian officials.
Anindya Banerjee, head of commodity and currency at Kotak Securities, said the current environment is marked by extreme uncertainty. While markets can absorb price shocks, the risk intensifies significantly in the event of energy shortages, which is pushing prices to demand-destructive levels.
He added that if crude oil remains above $100 per barrel for another week, the rupee could weaken further—possibly pausing around 94 per dollar before drifting towards the 94.50–95 range.
Brent crude was last trading around $106 per barrel, as fresh reports of attacks involving US and Iranian forces continued to emerge.
