The Indian rupee has weakened today as oil prices climbed to a more than one-month high on mounting fears of supply disruptions in the Middle East, although intermittent dollar sales by state-run banks limited the local currency’s losses, Reuters reports.

The renewed escalation in the Iran conflict has driven oil prices up more than 25pc this month, leaving the rupee increasingly vulnerable as higher energy costs threaten to lift India’s inflation and widen the current account deficit.

On the day, the rupee declined 0.2pc to 96.44 as of 11am IST (10:30am PKT). The currency’s 15-day correlation to Brent crude prices has climbed to 0.9, indicating the rupee is increasingly tracking moves in oil prices.

“Our model analysis suggests that the INR remains one of the Asian currencies most exposed to higher oil prices,” Barclays analysts said in a note, adding that even after controlling for broad dollar strength or weakness, two-year yield differentials and local equity performance, the rupee’s sensitivity to oil prices has increased in 2026.

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