The Indian rupee is expected to open weaker on June 23, weighed down by rising geopolitical tensions in West Asia following a reported US airstrike on Iranian nuclear facilities. Bond yields likely to open marginally higher.
The escalation has triggered a global risk-off sentiment, pushing crude oil prices higher and amplifying concerns over potential supply disruptions via the Strait of Hormuz, which accounts for nearly 20 percent of global oil trade. However, analysts believe a sharp depreciation in the rupee is unlikely, owing to potential intervention by the Reserve Bank of India (RBI) to curb excessive volatility.
Market participants expect the rupee to open around 86.80 against the US dollar, with the possibility of breaching 87 if oil prices continue to climb. The dollar index is also likely to strengthen amid heightened risk aversion, with a parallel uptick expected in gold and silver as investors seek safe-haven assets.
“The rupee may remain under pressure, but a steep fall is unlikely. The RBI’s robust foreign exchange reserves of $699 billion and an import cover of 11.5 months offer ample room to manage currency stability,” said Amit Pabari, Managing Director at CR Forex.
On June 20, Indian rupee closed at 86.60 a dollar, up 0.2 percent from its Thursday's close of 86.73 a dollar. So far in June, the rupee weakened 1.2 percent while in 2025 it has fallen 1.1 percent.
Bond yields are projected to open marginally higher, reflecting concerns about rising inflation and external imbalances. Venkatakrishnan Srinivasan, Founder and Managing Partner at Rockfort Fincap, noted, “The surge in crude prices will directly affect India’s inflation and current account balance. The 10-year G-sec, which had eased to 6.31 percent post-policy, may now harden toward 6.40 percent as markets reprice risk.”
The 10 year bond yield on June 20 closed flat to 6.309 percent from its Thursday's close. So far in 2025, the bond yields have fallen nearly 40 basis points.
India, which imports over 85 percent of its energy needs, faces heightened macroeconomic vulnerability from rising oil prices. A $10 per barrel increase in crude could widen the country’s current account deficit by 0.3 percent of GDP and exert upward pressure on inflation.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said, “With crude rising and geopolitical uncertainty lingering, the rupee is likely to open weaker. Iran may retaliate, which will keep risk aversion elevated. The only positive is former President Trump’s recent appeal for peace, but its impact remains limited for now.”
In a televised address, US President Donald Trump confirmed that American forces had "completely and totally obliterated" Iran’s key nuclear facilities at Natanz, Fordow, and Isfahan. He warned of further military action if Tehran fails to pursue peace with Israel, intensifying uncertainty across global markets.
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