Indian rupee and stocks face pressure as oil surges on Iran tensions
Brent crude rose above $92.50 and later topped $95 as U.S.-Iran strikes and Red Sea attacks fueled supply fears, weighing on the rupee, equities and inflation outlook despite RBI support and earlier inflows.
India's currency and equity markets came under renewed pressure as oil prices climbed sharply amid escalating conflict involving the United States, Iran and Yemen's Houthis. The rupee, after rebounding 0.2% to 96.23 in the previous session, was seen opening weaker around 96.40-96.45, with traders citing higher crude prices, rising U.S. Treasury yields and continued concern about supply disruption, partly offset by central bank-linked inflows and likely Reserve Bank of India intervention near 96.50. Indian stocks were also set for a lower open, with GIFT Nifty at 23,864 indicating a fall below the Nifty 50's Wednesday close of 23,996.25 after blue chips logged their biggest one-day decline in two weeks. Market participants said higher crude threatens India's inflation, trade balance, growth and corporate margins; provisional data showed foreign institutional investors sold 8.19 billion rupees of shares and domestic institutional investors sold 4.18 billion rupees, while some stock-specific moves were expected around earnings.
- Brent crude: A global oil benchmark whose price movements can affect inflation, trade balances and financial markets in oil-importing economies such as India.
- foreign exchange reserves: Assets held by a central bank in foreign currencies, used in part to manage external shocks and support the domestic currency.
- GIFT Nifty futures: Derivatives based on the Nifty 50 that indicate expected market opening levels in India.