New Delhi: The Indian rupee plummeted to a historic low of 95.20 against the US dollar during early trading on Thursday, driven by a combination of skyrocketing Brent crude prices and a relentlessly strong greenback. Opening at 95.01 at the interbank foreign exchange market, the local currency quickly lost ground, marking a significant 32-paise decline from its previous record closing of 94.88 on Wednesday. Market analysts attribute this sharp depreciation to the intensifying energy crisis and safe-haven demand for the American currency following another diplomatic impasse between Washington and Tehran.
Global oil benchmarks reached approximately 122 US dollars per barrel as supply chain anxieties deepened over the ongoing blockade of Iranian ports and the strategic Strait of Hormuz. These elevated fuel costs have significantly inflated India’s import bill, putting immense pressure on the trade deficit and investor sentiment. Furthermore, the US Federal Reserve’s recent decision to maintain current interest rates has bolstered the dollar index, which hovered around 98.96 on Thursday morning, further weakening emerging market currencies like the rupee.
Domestic equity markets reflected this fiscal anxiety, with the Sensex crashing over 800 points and the Nifty dropping nearly 300 points in early sessions. Foreign Portfolio Investors remain net sellers in the Indian market, having offloaded equities worth over 2,400 crore rupees in a single day. Experts suggest that as long as geopolitical volatility in West Asia persists and oil prices remain on an upward trajectory, the rupee may continue to face downward pressure from consistent dollar buying by institutional investors.
Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, noted that the primary catalyst remains the standoff in the Middle East, where the restricted passage of tankers through critical maritime routes is driving up costs. With bond yields touching the 7 per cent mark and foreign investors exiting both equity and debt segments, the short-term outlook for the rupee remains cautious. Traders are closely monitoring international developments and potential interventions by the central bank to stabilize the currency amidst this unprecedented volatility.
