A sharp rise in crude oil prices linked to the Iran war has triggered a surge in Indian rupee options trading, with market activity heavily tilted toward short-term bets on currency weakness.
The increase in trading reflects both speculative and hedging demand, as investors position for continued pressure on the rupee. The shift highlights how the oil price spike has disrupted markets and reshaped currency strategies.
In the first 2 weeks of March, the notional value of dollar-rupee options traded in the U.S. reached about $18.5 billion, close to the $24–$25 billion recorded in each of the previous 3 months, according to data from a global financial data provider. Adjusted for the shorter period, volumes are nearly double, indicating a strong post-war spike following the start of the Iran conflict on February 28.
Data from over-the-counter derivatives markets, where firms report transactions to registered swap data repositories, shows clear positioning trends. Dollar/rupee call volumes are exceeding puts, signalling expectations of further weakness in the Indian currency.
Most call option strikes are clustered around current spot levels and slightly higher, suggesting expectations of gradual upside in the dollar-rupee pair rather than sharp movements. At the same time, the bulk of trading activity is concentrated in short-term contracts, pointing to strategies aimed at capturing near-term volatility driven by the conflict.
“Last week was more about positioning for an escalation in the conflict, which put pressure on oil-importing currencies, and this week is more of the same,” a Singapore-based portfolio manager at a hedge fund said, requesting anonymity since he is not authorised to speak to the media.
“Funds are trading the winners and losers from higher energy prices.”
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream LinkedIn | The Mainstream Facebook | The Mainstream Youtube | The Mainstream Twitter
About us:
The Mainstream is a premier platform delivering the latest updates and informed perspectives across the technology business and cyber landscape. Built on research-driven, thought leadership and original intellectual property, The Mainstream also curates summits & conferences that convene decision makers to explore how technology reshapes industries and leadership. With a growing presence in India and globally across the Middle East, Africa, ASEAN, the USA, the UK and Australia, The Mainstream carries a vision to bring the latest happenings and insights to 8.2 billion people and to place technology at the centre of conversation for leaders navigating the future.
