- Indian Rupee (INR) falls for a second day
- Oil jumped after Israel attacked Iran
- US Dollar (USD) rises versus major peers on safe-haven flows
- US Michigan sentiment improves
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising for a second day. The pair rose 0.13% in the previous session, settling on Thursday at 85.58. At 19:30 UTC, USD/INR traded 0.60% higher at 86.09 and traded in a range of 85.90 to 86.20.
The engine repaint file sharply on Friday as oil prices surged following Israel’s strike on Iran. This sent the rupee tumbling, prompting the Reserve Bank of India to step in to limit losses. The attacks fueled risk aversion across financial markets, with riskier assets such as Asian currencies and equities falling while safe havens, including gold, rose.
Oil prices briefly spiked 11% higher to 77.50 on concerns of supply disruption before easing back slightly in one of the strongest daily gains since Russia invaded Ukraine. Rising oil prices are a problem for India, which imports over 80% of its domestic oil needs. The markets will be watching developments in the Middle East over the weekend amid fears that tensions could quickly spread into the border region.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is rising 0.24% to 98.15 after yesterday’s losses.
The US dollar is rising on safe-haven flows after Israel attacked Iran overnight and Iran pledged retaliation. This is the first time in months that the US dollar has behaved as a safe haven.
The US dollar has been in decline throughout most of the year owing to Trump’s erratic trade policies.
On the data front, University of Michigan confidence improved, rebounding to 60.5 in June, very well ahead of the 53.5 estimate and up from 52.5 in the previous month.
Attention is now turning to the Federal Reserve’s interest rate decision next week. The central bank is widely expected to leave interest rates unchanged at 4.25% to 4.55% %.
