The Indian Rupee has once again fallen below the 95 mark against the US dollar and hit a new record low.The depreciation in the currency comes largely on the back of a surge in crude oil prices, which hit their 3-year high over the US-Iran standoff.
On Thursday, the domestic currency opened at the 95.02 mark per dollar, down 0.2% from its previous close of 94.84 against the greenback. The currency then slipped to a new record low of 95.27 against the dollar surpassing its March’s record low of 95.22 per dollar
This marks the currency’s second breach of the 95-level mark. Here’s whats driving the fall for currency:
Crude climbs over $122/bbl – weighs on rupee
The weakening of the currency is majorly being driven by the surge in oil prices. Brent crude futures are trading over the $122/bbl mark, at their highest level in over three years. While the US benchmark, West Texas Intermediate, too is quoted high around the $110/bbl level.
The high crude prices weigh on emerging market currencies like the Indian rupee, as oil is predominantly traded in dollars. High crude prices increase the demand for dollars, adding to the downside for the rupee.
The stalled shipments through the Strait of Hormuz route have also created an environment of uncertainty, as India, a net oil importer, imports a large chunk of its oil and energy supplies from the Middle East.
“The main effect on the rupee has been from the rising oil prices, which again touched $120 per barrel and looked headed for further upside, as the US continues with its blockade of Iranian ports while Iran does not allow any ship/tanker to pass through the Strait of Hormuz,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors.
Oil pressure adds to import bill
With the dual blockade of the conduit, markets are concerned about when shipments through the route, which carries nearly 20% of global energy flows, will resume.
“Over the past three months, oil alone has added $12–13 billion every month to the import bill. That’s not just a number; that’s pressure — pressure on the trade deficit, pressure on inflation, and ultimately, pressure on the rupee,” said Amit Pabari, Managing Director at CR Forex Advisors.
FPI outflow on rise
Pabari added that foreign investors have already pulled out nearly $20 billion from Indian equities this year, surpassing the $18 billion outflow of 2025. “When money leaves, demand for dollars rises and the rupee feels the pressure,” he said.
As of April 29, FIIs were net sellers of domestic equities worth Rs 2,185.95 crore, according to NSE data.
Rise in dollar index
The US Dollar Index rose after the US Federal Reserve delivered its policy decision, which has been deemed relatively hawkish. The US central bank held rates steady and reinforced a “higher-for-longer” stance.
The index, which measures the strength of the greenback, is trending up on the day. A rise in the dollar index increases demand for the greenback, making it a safe haven for investors, as they tend to shift away from riskier emerging market currencies like the rupee.
Markets also expect a rather hawkish stance from the European Central Bank and the Bank of England. “The tone is likely to stay hawkish, with hints of possible hikes in the coming months,” Pabari added.
Outlook for rupee
“Technically, 93.50–93.80 remains a strong support zone, and on the upside, 95.00–95.20 will act as a resistance band,” said Pabari.
He concluded that the currency is no longer trading in isolation but is reacting to three dominant forces: oil, capital flows, and central bank policies.
