Rupee sinks to all-time low of 95.58 against US dollar amid crude oil shock

The rupee fell to a record 95.58 against the US dollar as crude prices jumped and Iran-related tensions flared. The slide has deepened concerns over inflation, market volatility and pressure on India's external balances.

In Short

• Rupee crashes to historic low amid crude oil price surge
• Weak rupee raises inflation and fuel price concerns nationwide
• Traders expect RBI interventions through state-run banks to curb sharp swings

The rupee plunged to a fresh all-time low of 95.58 against the US dollar on Tuesday, as surging crude oil prices and mounting concerns over tensions involving Iran rattled financial markets and intensified pressure on India’s external balances.

The sharp fall comes a day after the rupee had already logged its steepest single-day decline in more than a month, closing at a then-record low of 95.31 per dollar.

Currency traders and analysts said the rupee remains under severe pressure due to soaring crude oil prices, heavy dollar demand from importers and continued foreign fund outflows from Indian markets.

Brent crude prices have surged sharply since the Iran conflict escalated earlier this year, worsening concerns around India’s import bill and current account deficit.

India imports more than 85% of its crude oil requirements, making the rupee particularly vulnerable whenever global energy prices spike.

The latest weakness in the currency also comes amid growing fears that the fragile US-Iran ceasefire may collapse. News agency Reuters reported that US President Donald Trump recently described the April ceasefire as being “on life support”, reviving fears of prolonged disruption in the Gulf region and further volatility in oil markets.

RBI likely intervening to curb volatility

Traders believe the Reserve Bank of India (RBI) has already stepped into the forex market multiple times over the past few sessions to slow the rupee’s fall.

Reuters also reported on Monday that state-run banks were likely selling dollars on behalf of the RBI after the rupee weakened sharply during trade.

The central bank has been deploying a mix of intervention measures in recent weeks, including tighter forex market regulations and steps aimed at easing dollar demand from oil companies.

However, analysts warn that sustained pressure from elevated crude prices and foreign outflows could continue to weigh on the rupee despite RBI action.

A Reuters poll of currency analysts earlier this month projected the rupee to remain around the 95-per-dollar mark over the next year, although some warned that prolonged geopolitical escalation could push the currency towards 97-98 levels.

Markets under pressure

The rupee’s slide has also hurt investor sentiment across Indian financial markets.

Benchmark stock indices declined sharply on Monday as rising oil prices triggered concerns over inflation, fiscal pressures and slowing growth.

Economists say a weaker rupee could eventually translate into higher imported inflation in India, especially if crude oil prices remain elevated for an extended period. That may increase pressure on fuel prices, transportation costs and several imported goods.

The government has already urged citizens and businesses to conserve fuel and reduce avoidable foreign exchange spending amid rising global uncertainty.

Market participants will now closely track crude oil movements, developments in West Asia and further RBI intervention for cues on the rupee’s next move.

- Ends