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Rupee slides as oil price jump and higher US yields weigh on USD/INR

USD/INR hit a fresh seven-week high near 96.13 as crude futures surged and 10-year US Treasury yields climbed toward 4.66%.

Reported · Written up by our desk · Major Pairs

The Indian rupee weakened sharply against the US dollar on Tuesday, with USD/INR rising to a fresh seven-week high near 96.13. FXStreet attributed the move to surging oil prices and stronger US Treasury yields reducing the appeal of the rupee.

In early trading, the MCX Crude Oil contract expiring July 20 opened about 4.2% higher to around Rs. 7,673, its strongest level in nearly a month. The outlet said currencies in oil-import dependent economies such as India typically underperform when energy prices rise.

Rising bond yields also added pressure, with 10-year US Treasury yields up about 0.3% to near 4.62%, approaching an 18-month high of 4.66%. FXStreet linked the risk sentiment hit to US policy moves around Iran, including the reinstatement of a blockade on Iranian sea ports and a proposed 20% fee on cargo ships using the Strait of Hormuz.

In addition, investors were watching upcoming US data and policy signals, including June Consumer Price Index and Federal Reserve Chairman Kevin Warsh’s testimony. FXStreet noted Fed Governor Christopher Waller said another hot inflation reading would be treated as “signal, not noise,” and cited market estimates for US headline CPI cooling to 3.8% year over year in June from 4.2% in May.

Latest closeWTI crude $78.04 ▲9.3%

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