USD/INR Surges as Geopolitical Tensions Weigh on Indian Rupee

USD/INR Surges as Geopolitical Tensions Weigh on Indian Rupee

USD/INR jumps higher during Wednesday's Asian session as the Indian Rupee (INR) weakens near a two-month low. Risk-off sentiment fueled by intensifying geopolitical tensions in the Middle East — particularly between Israel and Iran — is pressuring emerging market currencies, including the INR.

Crude Oil Spike Pressures INR

As India is the world’s third-largest oil importer, any spike in crude oil prices has a direct negative impact on the Rupee. The recent surge in oil prices is compounding downside pressure on the INR, which already lags behind many of its Asian peers.

All Eyes on the Fed

The Federal Reserve’s rate decision, due later today, is the next major driver for the USD/INR pair. While the Fed is widely expected to leave interest rates unchanged at 4.25%-4.50%, traders will scrutinize the central bank’s tone and updated dot plot for clues on potential rate cuts in September or beyond. A dovish Fed could provide some short-term support for the INR by weakening the US Dollar.

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