The rupee plunged to a record low on Friday, breaching the Rs 93 mark for the first time as a surge in crude oil prices and escalating tensions in West Asia triggered fresh pressure on the currency.
It weakened to Rs 93.15 against the US dollar in early trade, extending recent losses as investors reacted to the intensifying conflict across the Gulf, which has disrupted energy infrastructure and pushed oil prices sharply higher.
Brent crude remains firmly above $100 per barrel amid fears of prolonged supply disruptions, a key concern for India, which imports a large share of its oil needs. Higher oil prices increase the country’s import bill, drive up demand for dollars, and put downward pressure on the rupee.
At the same time, rising geopolitical uncertainty has triggered a global risk-off mood, with investors moving towards safe-haven assets such as the US dollar.
This has strengthened the dollar and weighed on emerging market currencies, including the rupee.
Foreign institutional investors (FIIs) have also stepped up selling in Indian equities amid the uncertainty, further adding to pressure. When global funds pull money out, they convert rupees into dollars, accelerating the currency’s decline.
The US Federal Reserve’s cautious stance has added to the pressure.
With limited room for rate cuts and inflation risks still in focus, the dollar has remained strong, keeping global liquidity tight and reducing the appeal of emerging markets.
For India, the implications go beyond the currency market. A weaker rupee, combined with elevated crude prices, could push up imported inflation, particularly in fuel and commodities, and increase costs for businesses and consumers.
Market participants will now closely track developments in the West Asia conflict, movements in crude oil prices, and any signals of intervention from the Reserve Bank of India to stabilise the rupee.
