The Indian rupee declined 29 paise to settle at 95.76 against the US dollar on Thursday, snapping a two-day gaining streak amid fresh dollar demand from oil companies and forward maturities. According to Business Standard, the currency opened lower at 95.27 per U.S. dollar and traded in the range of 95.27 to 95.76 before settling at 95.76, with dealers pointing to sustained dollar demand, particularly from oil companies, alongside usual mid-month flows. This follows Wednesday's 16 paise appreciation to close at 95.25 against the dollar, highlighting the volatile nature of recent trading sessions. The latest decline came as the dollar index renewed gains amid fresh US attacks over Iran and as US consumer inflation accelerated in May to its fastest pace in more than three years due to soaring energy costs. Forex traders said the USD/INR pair opened on a negative note after U.S. President Donald Trump said Iran was responsible for downing an American military helicopter near the Strait of Hormuz and that the U.S. "must" respond to the attack. Bankers noted that sustained demand for dollars from importers, coupled with equity-related outflows, has offset much of the positive impact of the central bank's initiatives. The currency's current trading level remains only about 0.2% stronger than its level prior to the RBI's announcements, suggesting limited follow-through from the measures.
The United States and Iran traded strikes for the second day on Thursday (June 11, 2026), pushing West Asia closer to the resumption of a full-scale war, as reported by The Hindu. The American attack, which lasted into Thursday morning (June 11, 2026) in Iran, appeared more intense and wider than the day before, but Tehran released little information on the extent of the damage. An Indian official said a U.S. attack on an oil tanker allegedly trying to violate Washington's blockade on Iranian ports killed three Indian mariners, underscoring the danger to seafarers. U.S. strikes on Iran overnight dented hopes of a broader resolution to the conflict. Iran closing the strait is a reversal from recent weeks, when Iran had allowed limited transit for ships from friendly nations. The surge came as tensions in the Middle East continued to simmer more than 100 days into the conflict, with forex traders saying elevated Brent crude prices dented investor sentiments. Dhaval Shah, founder and managing director, De-Risk Forex Consultancy, noted that "the dollar had weakened post the release of yesterday's U.S. inflation data, but reversed its weakness after news of escalation of conflict between U.S. and Iran." Shah added that "despite such strikes and a lapse of the ceasefire, we assess the war to be on a de-escalatory path as indicated by neutral reaction of many financial assets, mainly oil."
The Reserve Bank of India intervened in the foreign exchange market through dollar sales during Thursday's trading session, according to Business Standard. The RBI was protecting 95.65 per dollar initially and 95.75 per dollar later, which kept it below the 95.80-per-dollar level as the market not so enthusiastically awaits inflows from NRI customers and public sector undertakings in the form of external commercial borrowings (ECBs), said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. The RBI's outstanding net short dollar position in the forward market decreased for the first time in six months to $95.30 billion at the end of April from $103.06 billion at the end of March, as reported by Business Standard. Of the $95 billion net short dollar position, $13.52 billion was in one-month contracts, $10.90 billion in one- to three-month tenures, $20.15 billion is set to mature between three months and one year, and the remaining $50 billion was in contracts of more than one year. Dilip Parmar, research analyst at HDFC Securities, noted that "after two days of gains, the Indian rupee depreciated due to fresh dollar demand driven by forward maturities and a recovery in the dollar index amid safe-haven flows." Parmar added that "a decisive breach above 95.80 could trigger sharp short-covering and aggressive hedging, paving the way towards 96.50. On the downside, 94.70 per dollar continues to act as a strong base."
Brent crude, the global oil benchmark, was trading lower by 0.67% at $92.48 per barrel in futures trade, as reported by The Hindu. The surge came as tensions in the Middle East continued to simmer more than 100 days into the conflict with Iran and Israel exchanging missile strikes, with forex traders saying elevated Brent crude prices dented investor sentiments. Higher oil prices typically widen India's import bill, pressure the current account, and increase demand for dollars from oil companies. As India heavily relies on energy imports, any spike in global crude oil prices directly widens the trade deficit and weakens the domestic currency, according to traders. On NSE, USD/INR futures are up 0.38% at 96.05, reflecting continued pressure from oil price movements and volatile trading conditions.
The yield on the benchmark 10-year government bond softened by 2 basis points (bps) to settle at 6.92 per cent as optimism continued around expectations of foreign inflows following the Reserve Bank of India's (RBI's) recent measures, as reported by Business Standard. On the domestic equity market front, local stock markets ended with minor losses today amid cautious investor sentiment, as market participants monitored developments in West Asia, as reported by Business Standard. The Nifty is largely consolidating around two-month low, with trading remaining volatile due to the weekly expiry of Sensex futures and options contracts. On the domestic equity market front, Sensex declined 150.63 points to settle at 73,832.55, while the Nifty was down 53.35 points to 23,161.60, as reported by The Hindu. Foreign institutional investors offloaded equities worth ₹2,124.98 crore on a net basis on Wednesday, according to exchange data. Despite the latest decline, analysts say the measures to attract dollars would lead to $30-50 billion of money flowing in, according to The Economic Times. Apart from oil prices, the rupee will have to contend with a tepid risk environment, following a further selloff in US equities, as reported by The Hindu BusinessLine*. The rupee has depreciated by 6.14 per cent in the current calendar year, while in the current financial year it has weakened by 0.99 per cent against the greenback, according to Business Standard.
