Despite the sale of the US currency by the RBI, the rupee ended at a new closing low of 83.28 against the dollar. This is due to the mounting pressure and rising fears that the Israel-Hamas conflict may draw in its neighbors. Due to this, concerns of escalation resulted in Brent Oil futures firming up above USD 90 a barrel. 

"The currency market is reaching tensions in Israel," said forex specialist K N Dey. Oil prices might skyrocket if this turns into a full-fledged battle with other countries." 

"With US Secretary of State Anthony Blinken visiting Israel twice in a week and the Organisation of Islamic Cooperation meeting in Saudi Arabia next week, the situation is very fluid." Given the circumstances, it is unlikely that there would be any significant inflows," Dey added. He noted that the extent to which the RBI allows the market to find its own level will decide the rupee's outlook. "Once RBI moves out, it is very likely that the rupee would fall, reaching to touch 84 levels also," he went on to say.

Following an unexpected rise in the interest rates in the US, the rupee is coming under pressure almost a year after the forex market witnessed volatility. And on Oct  19, 2022, it has breached the 83 level for the first time. Dealers said that the forex market was also concerned over the maturing of some sell-buy swaps undertaken by RBI last year to increase the dollar supply. There could be shortage of dollars if RBI does not roll over the transactions, 

One advantage for the currency markets was that macroeconomic fundamentals were strong in comparison to previous periods of volatility. In September, the trade deficit fell to a five-month low of USD 19.5 billion. The addition of India to the JP Morgan Emerging Market Bond Index increased sentiment towards international investment.