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Rupee weakens versus dollar as oil jumps on Hormuz compensation demands

USD/INR is near 95.40, with oil prices up as uncertainty grows around Strait of Hormuz reopening conditions tied to war compensation demands.

Reported · Written up by our desk · Major Pairs

The Indian rupee opened weaker against the US dollar on Tuesday, with USD/INR rising to around 95.40 as surging oil prices weighed on the currency.

FXStreet linked the move to escalating fears of a prolonged global supply disruption after US President Donald Trump demanded compensation for war casualties in the Middle East from Iran, responding to Iran’s own call for compensation as a condition for reopening the Strait of Hormuz. The article said both sides’ compensation demands have heightened uncertainty over near term truce prospects, supporting higher oil prices.

The report added that the MCX Crude Oil contract expiring August 19 was up about 0.45% near Rs. 7,835, closer to its weekly high. It also noted that economies that rely heavily on imported oil, such as India, often underperform when oil prices rise.

Looking ahead, the article said the next major catalysts for USD/INR are CPI releases, with US headline and core CPI expected to have cooled to 3.4% and 2.5% year on year respectively, which could affect expectations for further Federal Reserve rate hikes. FXStreet also cited technical levels, saying USD/INR is holding above its 60 day EMA near 95.26, while the 14 day RSI around 47 points to consolidation rather than strong direction.

Latest closeWTI crude $82.30 ▲5.3%

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