The rupee weakened to a fresh record low on Monday as a sharp surge in crude oil prices rattled Asian currencies and intensified pressure on major energy importers such as India. Traders said the losses would likely have been steeper if not for intervention by the Reserve Bank of India (RBI) to stabilise the currency.
The rupee declined about 0.6 percent to 92.33 against the dollar in early trade, breaching its previous record low of 92.30 hit last week. The fall reflects growing anxiety in currency markets after the escalation of the conflict involving United States, Israel and Iran, which has pushed global oil prices sharply higher and triggered risk aversion across emerging markets.
India, one of the world’s largest crude importers, is particularly vulnerable to spikes in oil prices. Higher crude costs tend to widen the country’s current account deficit, increase imported inflation and put sustained pressure on the rupee.
Currency dealers said the central bank was likely selling dollars intermittently through state-run banks to prevent disorderly volatility in the market. Such intervention typically aims to smooth fluctuations rather than defend a specific level for the rupee.
Oil prices have surged past $100 per barrel amid fears that the widening West Asian conflict could disrupt supply routes in the region, which accounts for a significant share of global crude exports. The spike has weighed on most Asian currencies, with investors shifting towards safe-haven assets and the dollar gaining strength globally.
For India, sustained high oil prices could complicate the inflation outlook and reduce the Reserve Bank of India’s room to ease monetary policy. Economists warn that if crude remains elevated for an extended period, it could also affect the fiscal balance by raising the government’s subsidy burden and import bill.
Market participants expect the rupee to remain volatile in the near term, with movements likely to be driven by developments in the West Asian conflict, global crude prices and dollar demand from oil importers.