The Indian rupee is highly vulnerable among Asian currencies, with Barclays and MUFG warning of a potential depreciation towards 100/$ if the West Asia conflict persists, driven by widening current account deficits and elevated crude oil prices.
Donald Trump has issued a stern warning to Iran regarding alleged fees imposed on tankers passing through the Strait of Hormuz, further escalating tensions amid fragile ceasefire agreements and ongoing disputes with Israel over Lebanon.
The rupee recovered to 95.18 against the US dollar after hitting an all-time intra-day low of 95.44. The recovery was supported by possible RBI intervention amid renewed Gulf tensions and rising crude oil prices.
The Congress on Sunday lashed out at Prime Minister Narendra Modi over the US' statements after three Indian sailors were killed in American attacks on ships, with party leader Rahul Gandhi saying the "compromised PM" listens "like an obedient servant" and "complies with the orders".
Donald Trump has issued a stern warning to Iran, stating that the US will take a tougher stance if a diplomatic resolution regarding its nuclear programme is not reached soon.
An Indian national was killed in an attack on Kuwait International Airport, prompting the Indian Embassy to offer condolences and assistance. The attack, attributed to Iranian strikes, led to the suspension of air traffic and caused casualties and damage.
The United States and Iran could resume negotiations as early as next week in Islamabad, according to a report by The Wall Street Journal citing people familiar with the matter.
Gold prices in the national capital surged by Rs 600 to Rs 1.65 lakh per 10 grams, extending gains for the third consecutive day, while silver rebounded by Rs 5,000 to Rs 2.71 lakh per kilogram, driven by geopolitical tensions and inflation concerns.
The US-China rapprochement, however tenuous, is not without implications for India. Both China and Pakistan have become closer to the US, notes Ambassador T P Sreenivasan.
RBI Governor Sanjay Malhotra stated that the central bank is closely monitoring whether the supply shock from the West Asia conflict will lead to a generalised price rise, potentially necessitating monetary policy action.
US President Donald Trump is reportedly considering military action against Iran due to stalled negotiations and Tehran's approach to its nuclear issue, according to CNN sources. Divisions within the Trump administration have emerged over the next course of action, with some officials advocating for a more aggressive approach through targeted military strikes.
India has expressed serious concerns about the West Asia crisis and its potential impact on energy supplies and maritime stability, urging BRICS nations to find practical solutions to geopolitical challenges and unilateral sanctions.
China and Pakistan have jointly proposed a five-point peace plan to address the ongoing conflict in West Asia, focusing on de-escalation and safe passage through the Strait of Hormuz.
Indian equity markets, including the Sensex and Nifty, experienced a significant downturn for the second consecutive day, driven by escalating geopolitical tensions in West Asia and persistent foreign fund outflows.
Moody's Ratings has highlighted that Indian banks are among the most exposed in the Asia-Pacific region to the West Asia crisis, primarily due to India's high dependence on energy imports, which could lead to increased inflation, higher interest rates, and strained borrower cash flows.
Iran has strongly criticised US plans to impose a blockade on its ports, warning that maritime security across the Persian Gulf region would be jeopardised if its own security is threatened.
Tensions in West Asia have dramatically escalated as Israel launched targeted military operations against Iran, triggering widespread blasts across strategic cities, following earlier Iranian projectile attacks on Israel.
India has welcomed the ceasefire between the US and Iran, advocating for de-escalation, dialogue, and diplomacy to secure lasting peace in West Asia.
Trump added that the United States would assist in managing the traffic buildup in the Strait of Hormuz.
Congress leader Rahul Gandhi has warned of a severe economic crisis looming over India, criticising Prime Minister Narendra Modi's economic policies and foreign travels.
The Reserve Bank of India (RBI) and the central government have introduced a package of measures, including tax exemptions for FPIs on government securities and a concessional foreign-exchange swap facility, aiming to attract up to $50 billion in foreign capital. This initiative is designed to strengthen India's balance of payments and potentially cover the projected BoP gap for FY27.
India emerged reasonably well from 2025. But now, the oil shock and war-related supply disruptions have again driven funds out of India and significantly weakened the rupee, points out Ajay Chhibber.
Foreign Portfolio Investors (FPIs) withdrew nearly Rs 33,000 crore from Indian equities in May, bringing the total outflow for 2026 to Rs 2.25 lakh crore, driven by weak earnings growth, rupee depreciation, and more attractive opportunities in other global markets.
Moody's Ratings has reduced India's GDP growth forecast for 2026 to 6 per cent, citing subdued private consumption, capital formation, and industrial activity due to higher energy costs and global uncertainties.
US President Donald Trump on Wednesday (local time) claimed that Iran has asked US for a ceasefire. He said that Washington would consider it once the Strait of Hormuz is open.
US President Donald Trump is set to visit China for talks with President Xi Jinping on trade, global issues, and the Gulf war. The visit aims to address trade frictions and other key issues, with high expectations for progress.
India has significantly reduced Aviation Turbine Fuel (ATF) prices for international airlines by 27% due to easing global fuel benchmarks, while simultaneously increasing commercial LPG and 5-kg cylinder prices to record highs.
The United States Central Command (CENTCOM) has announced that American forces are maintaining a strict maritime restrictive operation in the region, continuing to enforce a blockade against Iranian ports.
The Indian government has increased import duties on gold and silver from 6 per cent to 15 per cent to curb inbound shipments of precious metals amid a rising import bill due to the West Asia crisis.
Iranian Foreign Minister Seyed Abbas Araghchi spoke with Indian counterpart S Jaishankar to discuss the West Asia crisis, following discussions with Russian President Vladimir Putin.
Petrol and diesel prices in India have seen their fourth increase in less than two weeks, pushing cumulative hikes to nearly Rs 7.5 per litre since May 15, reaching their highest levels since May 2022. This surge, driven by global crude oil costs and the Iran conflict, is expected to exacerbate inflationary pressures and raise transportation costs across the economy.
United States President Donald Trump has welcomed the declaration from Tehran regarding the restoration of maritime access through the Strait of Hormuz.
Indian benchmark indices Sensex and Nifty experienced volatility due to conflicting developments in West Asia, including reports of the Strait of Hormuz closure, which led to a rebound in crude oil prices and heightened investor concerns about supply disruptions and inflation.
In a post on Truth Social, Trump used unusually harsh language to convey his message, reminding Tehran of his deadline to 'make a deal' or 'open the Strait'.
Donald Trump says several issues were settled during the final day of talks with Xi Jinping covering trade, tariffs, and diplomacy.
The closure of the Strait of Hormuz has disrupted some 20 per cent of the global flows but even if it opens, damages to production facilities in the region will take time to repair, points out Sunita Narain.
Indian equity benchmark indices Sensex and Nifty tumbled over 1 per cent for the third consecutive day, driven by a sharp rally in crude oil prices, massive selling in IT stocks, and unabated foreign fund outflows amid ongoing geopolitical tensions in the Middle East.
'We caught General Pervez Musharraf talking over the phone with his Chief of General Staff Lieutenant General Mohammad Aziz. Musharraf was visiting China; Aziz was in Rawalpindi.'
'FPIs are unlikely to return unless there is equilibrium between valuation premium and earnings growth.'
Iran has lodged a formal complaint with the United Nations, accusing the US of engaging in 'piracy' following the seizure of Iranian vessels. The complaint was detailed in a letter sent by Iran's UN envoy to the UN Secretary-General and the Security Council.
