- Indian Rupee (INR) falls to a record low below 93.00
- Oil prices rise 5% as Iran threatens oil infrastructure in the region
- The US Dollar (USD) is rising versus major peers
- The Fed left rates unchanged as expected
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising for a second day. The pair rose 0.14% in the previous day, settling on Tuesday at 92.39. At 20:30 UTC on Wednesday, the pair is up 0.79% to 93.12.
The Indian rupee fell to a record low on Wednesday, hit by strong demand for dollars and surging oil prices.
Oil prices jumped to $110, rising 5% on the day after Iran threatened to attack several energy facilities across the Middle East in retaliation for a strike on the South Pars gas field.
The escalation in tensions risks further disruptions to the region’s energy supply. This comes as the Strait of Hormuz remains effectively closed, increasing pressure on global supply.
So far, the conflict has halted shipments via the world’s most important oil artery — the Strait of Hormuz. Oil supply disruptions in the Middle East are estimated at 7–10 million barrels per day, accounting for roughly 7–10% of global demand.
This is particularly impactful for countries such as India, which imports over 80% of its energy needs.
The US dollar is rising across the board. The US Dollar Index, which measures the currency against a basket of major peers, is up 0.68% at 100.25, after two days of losses.
The US dollar is strengthening, tracking higher Treasury yields following the Federal Reserve’s interest rate decision.
The Fed left interest rates unchanged at 3.5%–3.75%, in line with expectations, with an 11–1 vote split.
As the decision was widely expected and fully priced in, the focus shifted to the Federal Reserve’s forecasts.
The central bank revised its growth forecast slightly higher to 2.4% this year, up from 2.3%, and raised its inflation outlook to 2.7% from 2.4%. However, the Fed’s dot plot still points to one rate cut this year.
Powell said the global oil shock may only have a temporary economic impact on the US, but he also noted a high level of uncertainty.
