Rupee sinks to one-month low on crude spike after Trump scraps Iran deal

The rupee slid to a one-month low on Monday, crossing 83.50 against the dollar, as crude oil prices jumped after President Donald Trump said the Iran nuclear deal was finished. The move broke weeks of tight trading that had held the currency in a narrow band through May.

Brent crude rose sharply in Asian hours on Trump's statement, reigniting fears of Middle East supply disruption. India imports about 85% of its oil needs, which makes the rupee one of the most exposed emerging-market currencies to any crude spike. Higher oil costs widen the trade deficit directly, forcing importers to buy more dollars.

The dollar index held near multi-week highs at the same time, compounding pressure on the rupee. Traders said the combination of a stronger greenback and surging crude left little room for the local unit to recover. The rupee touched 83.55 in early trade, its lowest since late April, before finding some support near that level.

Shares of oil marketing companies fell on the jump in crude, which threatens their margins. Airlines, which face higher jet fuel costs, also declined. A weaker rupee, on the other hand, typically lifts IT exporters such as Infosys and Wipro, which earn most of their revenue in dollars. Both stocks saw modest gains Monday, though the broader market stayed cautious.

The Reserve Bank of India is widely expected to step in to smooth the rupee's slide, as it has during past oil-driven selloffs. The central bank has ample reserves after months of dollar buying. Intervention can slow the move. It cannot reverse the trend if crude remains elevated, currency traders said. The selloff also reflected a broader risk-off tilt across emerging markets. Investors moved into safe-haven assets, pushing gold higher and sending Indian bond yields slightly lower as traders priced in a more cautious outlook. Sustained higher oil could force the RBI to revise its inflation forecasts upward, potentially delaying any rate cuts the market had started to expect later this year.

Trump said on Twitter that the 2015 nuclear pact was dead and that he would reimpose sanctions, sending oil prices surging on supply fears. The announcement hit markets already on edge after recent drone attacks on Saudi oil infrastructure.

For the rupee, the next key data point is the weekly forex reserves report due Thursday. That will show whether the RBI spent dollars to defend the currency. The central bank has not commented on Monday's move. For a broader take on how crude spikes feed into currency markets, see Oil surges 6% after Trump scraps Iran deal, risk-off sweeps markets. The Middle East jitters boost crude, tilt dollar as Fed minutes loom article also covers the cross-asset read.