Rupee extends losing streak as Iran war jitters lift oil to $100

The Indian rupee fell for the third consecutive session on Wednesday, as optimism about an end to the Iran war remained muted despite the U.S. indefinitely extending a ceasefire.

With reports of gunfire attacks on container ships in the Strait of Hormuz, Brent crude oil prices rose ‌above $100 a barrel ⁠and ⁠pegged back regional stocks, including a 0.9% drop in India's benchmark Nifty 50 index.

The ​rupee closed at 93.7950, down 0.3% from the previous close and hovering near ​its weakest level in three weeks.


The rupee managed to avoid steeper losses on the day on account of likely intervention by the ​central bank, traders said.

Oil-sensitive Asian currencies were on ⁠the defensive ‌with the Philippine peso and Indonesian rupiah enduring ​losses, while ​the Chinese yuan, an overall outperformer in the region, ⁠held steady.

"For now, the financial markets remain in ​limbo, awaiting news on whether there will be progress ​or whether another wave of military attacks lies ahead," MUFG said in a note.

"We are surely on the cusp of another surge in crude oil prices if this ceasefire does not hold, and that will most likely have a more notable knock-on impact ‌on risk assets."

The future trajectory of the rupee, though, traders and analysts say, will depend on how high oil ​prices remain ​and for how ⁠long.

An extended energy shock is likely to keep the rupee under strain, and it "wouldn't be a surprise," if the central bank takes additional measures ​to support the currency, a trader at a Singapore-based hedge fund said.

Despite weakness in the local currency, dollar-rupee forward premiums retreated in afternoon trading from intraday highs, with traders pointing to forward dollar sales from both foreign and state-run lenders.