Rupee hits record low as oil prices surge on Middle East tensions
Rupee hits record low as oil prices surge on Middle East tensions
Rupee slides to a historic low as fears of protracted oil-price spikes mount amid US-Iran tensions, hitting India's import bill and markets.
The rupee slipped to an all-time low near 95.50 per dollar at the open and stretched to about 95.62 later in the session, marking a roughly 5.2% drop since the Iran conflict intensified. The central bank stepped in to smooth the decline, but the currency remains under pressure as Brent crude prices surge on supply concerns linked to the ongoing tensions in the Middle East. The session underscored how a 46% jump in Brent since the conflict began is translating into higher energy costs for India, a major oil importer.
Foreign investors have pulled out more than $20 billion from Indian equities this year, amplifying the rupee’s weakness and widening fears about the broader current-account deficit. The stock market has also felt the heat as higher oil costs threaten growth and inflation trajectories.
Analysts cautioned that if the confrontation drags on, oil prices could stay elevated, keeping India’s import bill swollen and capital inflows fragile. The broader fear is that sustained currency weakness could feed into higher inflation and tighter financial conditions, complicating policy makers’ efforts to balance growth with price stability.
Beyond India, peers in the region have felt the ripple effects, with other oil-importing economies watching closely as the oil-price shock underscores the vulnerability of exchange-rate linkages during geopolitical shocks. The rupee’s latest move reflects a global risk-off tone where energy-market volatility converges with capital-flow dynamics to shape currency trajectories.
