The Indian rupee slid to a historic low on Friday, breaching the ₹93 mark for the first time as surging crude oil prices and escalating tensions in West Asia piled fresh pressure on the currency.
The rupee touched ₹93.15 against the US Dollar in early trade, extending its recent losses amid heightened geopolitical uncertainty and a spike in energy prices.
Oil rally dents rupee
Global benchmark Brent crude continues to hover above $100 per barrel, raising concerns over prolonged supply disruptions. For India, a major oil importer, this translates into a higher import bill and increased demand for dollars, both of which weigh on the rupee.
Flight to safety hurts emerging markets
The ongoing crisis has triggered a global risk-off sentiment, with investors flocking to safe-haven assets like the dollar. This has strengthened the US currency and put pressure on emerging market currencies, including the rupee.
Foreign institutional investors have also ramped up selling in Indian equities. As funds flow out, investors convert rupees into dollars, accelerating the currency’s decline.
Fed stance adds to pressure
The policy outlook of the US Federal Reserve has further supported the dollar. With inflation concerns lingering and limited room for rate cuts, global liquidity remains tight, reducing the attractiveness of emerging markets.
Broader economic impact
A weaker rupee, coupled with elevated crude prices, could stoke imported inflation in India, particularly in fuel and commodity segments, pushing up costs for businesses and consumers alike. Markets will now watch movements in oil prices, developments in the West Asia conflict, and any signals from the Reserve Bank of India on possible intervention to stabilise the currency.
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