The rupee opened weaker at around 95.01–95.02 against the US dollar, compared with the previous close near 94.85–94.88, and slipped further to an intraday low of 95.23, marking a decline of about 35–38 paise, or roughly 0.4%.
This move took the currency past its earlier record low of 95.21 hit in late March and marked its first sustained break above the 95 level since March 30.
Pressure on the currency remained supported by a stronger US dollar after the Federal Reserve maintained rates but signalled continued caution on inflation. The resulting rise in US bond yields supported the greenback, keeping emerging market currencies under strain.
Crude oil prices added to the pressure, with Brent trading near $121–122 per barrel after a recent spike of over 3%. Elevated oil prices raise India’s import bill and increase dollar demand in the foreign exchange market.
Geopolitical tensions in West Asia, along with concerns over supply disruptions in key shipping routes such as the Strait of Hormuz, also contributed to firmer oil prices and steady safe-haven demand for the dollar.
Foreign portfolio outflows from equities and debt, combined with import-related dollar demand, particularly from oil companies, further weighed on sentiment. The dollar index holding near 99 reflected broad-based strength in the US currency.
Vedika Narvekar, Research Analyst – Commodities & Currencies at Anand Rathi Shares & Stock Brokers, said the rupee has fallen to record levels near 95.35, driven by higher crude oil prices, sustained foreign fund outflows and a firm US dollar environment. She noted Brent crude briefly touched $126 per barrel, the highest since the onset of the conflict, amid concerns of possible escalation in West Asia.
She added that the currency has weakened about 6% year-to-date, reflecting increasing stress in external balances, including a widening current account gap and higher dollar demand from importers. According to her, India may be facing a third consecutive year of balance of payments deficit.
Narvekar said that while forex reserves of around $640–650 billion provide a cushion against volatility, they are unlikely to anchor specific levels. She also noted that continued geopolitical uncertainty and elevated oil prices could keep capital inflows subdued, with the rupee likely maintaining a gradual depreciation bias and near-term resistance around 95.60, though intervention by the Reserve Bank of India could limit sharp moves.
The rupee has now fallen more than 5% this year, following a similar decline last year, as external sector pressures persist amid elevated energy costs and uneven capital flows.
Analysts said sustained weakness in the currency could feed into imported inflation and influence foreign investment trends, adding to macroeconomic pressures.
-With Reuters inputs
