A man walks past a Rupee installation at the Reserve Bank Of India (RBI) headquarters in Mumbai, India, April 8, 2026. REUTERS
MUMBAI, April 13 (Reuters) – The Indian rupee fell sharply on Monday as oil prices climbed after the U.S. moved to blockade Iranian shipping following the collapse of weekend peace talks, triggering a selloff across local stocks and bonds.
The rupee declined 0.7% to 93.3950, while India’s benchmark Nifty 50 fell nearly 2%. The yield on the benchmark 10-year government bond rose more than 6 basis points to 6.973%.
The U.S. military said it will begin a blockade of all maritime traffic entering and exiting Iranian ports and coastal areas on Monday after weekend talks failed to reach a deal to end the war with Iran, jeopardizing a fragile two-week ceasefire.
In response, Brent crude oil futures rose over 7% to $102.2 per barrel.
Apart from higher oil prices, the rupee was also contending with diminshed support on Monday after banks completed the forced unwinding of arbitrage trades last week.
The unwinding had sparked chunky dollar sales in the onshore market but traders reckon the rupee may now settle into a fresh range with oil prices and portfolio flows being the major drivers.
“These measures do not resolve the underlying external backdrop: India’s balance of payments pressures, elevated Middle East exposure via the terms of trade and oil import bill, and the tepid capital inflow environment,” analysts at Goldman Sachs said in a note.
Foreign investors have net sold over $19 billion of local stocks and bonds since the Iran war began in late February amid worries over how elevated prices and supply disruptions may threaten India’s growth-inflation dynamics.
In global markets, Asian currencies were mostly weaker on Monday, while MSCI’s gauge of regional stocksfell over 1%
Reporting by Jaspreet Kalra and Nimesh Vora; Editing by Sumana Nandy and Sonia Cheema
