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The Indian rupee dropped to its weakest level in nearly a month on Wednesday after U.S. President Donald Trump said the interim accord with Iran to end the war was "over," sending oil prices soaring and hurting Asian currencies.
Traders said the Reserve Bank of India had likely intervened in the foreign exchange market to limit the rupee's fall via dollar sales from state-run banks.
The currency closed at 95.5550 per dollar, down 0.6% on the day. It had touched a low of 95.60, its weakest since June 11.
Oil prices jumped about 6% on Wednesday, hitting a two-week high after U.S. President Donald Trump said the memorandum of understanding ending the conflict with Iran was "over", renewing fears of disruptions to Middle East oil supplies.
Indian stocks fell 2%, their steepest drop in over three months, and the yield on the 10-year bond rose 8 basis points.
"Oil prices (are) squarely where the focus will be in the near term, alongside any signs of broad strengthening in the dollar," said Dhiraj Nim, economist and FX strategist at ANZ. "Long as oil prices remain elevated, INR is likely to face pressure."
Higher oil prices are a key risk to net energy importer India and a sustained rise threatens to slow development and lift inflation.
"Just when it looked like the macros are improving, Middle East uncertainty is back on the table," a trader at Mumbai-based bank said, referring to the recent turn in bias on Indian assets following the interim ceasefire and a slew of policy measures aimed at attracting dollar inflows.
"It's likely that TACO ('Trump Always Chickens Out') trades could play out however markets might not be as easily convinced as last time," the trader added.
Elsewhere, global stocks and bond prices tumbled, as investors fled risk assets.
U.S. stock index futures slid sharply on Wednesday, with Nasdaq futures touching a four-week low while the yield on the 10-year U.S. Treasury consider rose to a peak of 4.585%, its highest in over one month.
Published on July 8, 2026
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