The rupee slipped 8 paise to 95.78 against U.S. dollar in early trade on Wednesday (May 27, 2026) on elevated crude oil prices as fresh U.S. strikes dampened optimism for an imminent U.S.-Iran peace deal.

Forex traders said escalating U.S.-Iran conflict is again boosting safe-haven demand for the dollar. Moreover, Brent oil remained well bid at $98 levels as risk aversion, geopolitical risk and war clouds in West Asia kept it higher.

At the interbank foreign exchange market, the rupee opened on a positive note at 95.60, but soon pared the gains and fell to 95.78 against the American currency, registering a fall of 8 paise from its previous close. On Tuesday (May 26, 2026), the rupee depreciated 44 paise to close at 95.70 against the U.S. dollar.

“The rupee slipped after crude oil prices rebounded as hopes of an immediate U.S.–Iran peace deal faded slightly. Reports of renewed U.S. strikes on Iran and delays in negotiations kept markets cautious, even though investors still believe a broader resolution remains possible,” CR Forex Advisors Managing Director (MD) Amit Pabari said.

Now, attention shifts toward the upcoming RBI Monetary Policy Committee (MPC) meeting scheduled for June 3-5. “Markets remain divided between a possible rate hike and a status quo decision. The larger question, however, is whether RBI may choose to prioritise currency stability alongside inflation management,” he said.

“With the Central bank already using several measures to manage rupee volatility, interest rates could also become part of the broader strategy to attract inflows back into the system,” Mr. Pabari added. The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.09, down 0.07%.

Brent crude, the global oil benchmark, was trading down 1.50% at $98.09 per barrel in futures trade after reports that the U.S. had carried out fresh attacks against Iran, offsetting hopes of a deal to reopen the Strait of Hormuz.

On the domestic equity market front, Sensex climbed 127.83 points to 76,137.53 in early trade, while the Nifty was up 36.45 points to 23,950.15. Foreign institutional investors offloaded equities worth ₹2,407.87 crore on Tuesday (May 27, 2026), according to exchange data.

The rupee fell 17 paise to 95.43 against U.S. dollar in early trade on Tuesday (May 26, 2026), as month-end dollar demand and elevated crude oil prices weighed on investor sentiments.

Forex traders said the broader pressure on the rupee is likely to continue as long as geopolitical tensions remain elevated. Moreover, Reserve Bank of India (RBI) measures and liquidity support may help provide temporary relief and contain volatility in the near term, they said.

Why is the Indian Rupee falling?

At the interbank foreign exchange market, the rupee opened at 95.43 against the U.S. dollar, down 17 paise from its previous close.

On Monday (May 25, 2026), the rupee gained 34 paise to close at 95.26 against the U.S. dollar with the RBI selling dollars and keeping the rupee well bid at all upper levels.

Meanwhile, Brent oil prices rose after they touched $93 per barrel with reports of fresh attacks against Iran offsetting hopes of a deal to reopen Strait of Hormuz.

U.S. President Donald Trump on Monday (May 25, 2026) said negotiations with Iran to end the war were progressing “nicely”, but officials pointed out that a final decision may take some time due to the complex communication networks Tehran deploys to consult with its supreme leader.

“With RBI on the prowl the speculative pressure against the rupee has come down significantly and a better risk appetite in equities has kept rupee firmer against the dollar,” said Anil Kumar Bhansali head of treasury and executive director, Finrex Treasury Advisors Limited Liability Partnership (LLP).

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.04, down 0.19%.

Brent crude, the global oil benchmark, was trading up 1.84% $97.91 per barrel in futures trade.

Brent oil moved up after a fall on Monday (May 25, 2026) after reports that U.S. had carried fresh attacks against Iran offsetting hopes of a deal to reopen the Strait of Hormuz.

“Reports on Monday [May 25, 2026] evening indicated that U.S. had launched fresh strikes against missile launch sites and mine laying boats taking oil a bit higher despite talks being held with Iranian authorities. This could complicate the ongoing peace negotiations,” Mr. Bhansali said.

On the domestic equity market front, Sensex declined 264.82 points to 76,224.14 in opening trade, while the Nifty dipped 27.6 points to 24,004.10.

Foreign institutional investors turned net buyers and purchased equities worth ₹821.75 crore on Monday (May 25, 2026), according to exchange data.

The rupee depreciated 24 paise to 94.39 against the U.S. dollar in early trade on Tuesday (April 28, 2026), weighed down by elevated crude oil prices and month-end dollar demand amid a broader shift toward safe-haven assets.

Forex traders said Brent oil continued to move higher at $109 per barrel, keeping India’s position vulnerable.

Moreover, factors such as unabated foreign capital outflows amid rising geopolitical uncertainties dented investor sentiments further.

At the interbank foreign exchange market, the rupee opened at 94.35 against the U.S. dollar, then lost some ground and touched 94.39 against the U.S. dollar in initial trade, registering a fall of 24 paise over its previous close.

On Monday (April 28, 2026), the rupee had settled at 94.15 against the American currency.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 98.49.

Brent crude, the global oil benchmark, was trading higher by 0.99 per cent at $109.30 per barrel in futures trade.

“The Indian rupee seems to be standing at a crossroads, not weak enough to fall, not strong enough to rise”, said CR Forex Advisors MD Amit Pabari.

Meanwhile, Goldman Sachs has raised its oil price forecast to $94.39 per barrel, while trimming India’s 2026 growth forecast to 5.9%.

“When growth expectations soften at the same time, it reduces the cushion the currency usually enjoys,” Mr. Pabari added.

According to Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP, rising crude oil prices are keeping India’s position vulnerable.

“We have come to the end of the month, and the month-end demand could keep USD higher in the coming two days,” Mr. Bhansali added.

On the domestic equity market front, the 30-share benchmark index Sensex was trading 68.28 points or 0.09% lower at 77,235.35, while the broader Nifty was trading up 14.25 points or 0.06% at 24,029.25.

Foreign Institutional Investors offloaded equities worth ₹1,151.48 crore on Monday (April 27, 2026), according to exchange data.