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Indian rupee weakens as oil rally boosts USD/INR
USD/INR moved near 96.53 as MCX August 19 crude hit a fresh five-week high, amid renewed fears of Red Sea and Hormuz supply disruptions.
The Indian rupee opened lower versus the US dollar on Wednesday, with USD/INR rising to around 96.53 after a fresh rally in oil prices intensified concerns about additional global energy supply disruptions, FXStreet reported.
FXStreet linked the currency move to fears that the Bab el-Mandeb Strait, the southern gateway of the Red Sea, has been closed by Yemen’s Iran-aligned Houthis. The report said the closure halts oil exports from Saudi Arabia to Asian economies and could reduce global oil supply by 7%, citing Reuters.
FXStreet also noted that energy supply is already tight due to the closure of the Strait of Hormuz, a critical chokepoint tied to almost 20% of global energy supply. It said a Saudi-led coalition criticized Iran’s actions as a violation of international law, while US Secretary of State Marco Rubio warned that Iranian control of Hormuz would set a “dangerous precedent” with repercussions beyond the Middle East.
On flows and outlook, FXStreet reported that Foreign Institutional Investors turned net buyers on Tuesday after six straight sessions of net selling, and it added that higher oil prices could raise India’s import bill and weigh on sentiment for the Indian equity market. The report said USD/INR maintained a bullish near-term bias while holding above the 20-period EMA at 95.7889.