Indian rupee hits record low as renewed US-Iran tensions strain truce
Updated
Updated · Reuters · May 5
Indian rupee hits record low as renewed US-Iran tensions strain truce
11 articles · Updated · Reuters · May 5
The currency touched 95.4325 per dollar before closing at 95.28 in Mumbai, with traders saying state-run banks likely sold dollars for the Reserve Bank of India.
Brent crude has jumped from about $70 to near $115 since late February, worsening India's inflation, growth and current-account outlook and prompting forecasts for further rupee weakness if fighting persists.
MUFG sees the rupee at 95-96 under gradual de-escalation but 97-98 in a prolonged conflict, as Asian central banks and governments move to shield oil-importing economies from the energy shock.
With oil prices soaring, is the RBI's defense of the rupee simply delaying an inevitable collapse towards 100 per dollar?
Can India's tax-free financial hub attract enough dollars to rescue the rupee as the Gulf crisis deepens and reserves fall?
Could this painful oil shock be the catalyst that finally pushes India towards energy independence and a greener future?
Indian Rupee Hits Historic Low of ₹95.40 Amid U.S.-Iran Conflict and Oil Price Surge
Overview
In early 2026, escalating U.S.-Iran military clashes and a naval blockade of the Strait of Hormuz disrupted vital oil supply routes, causing global crude prices to surge above $110 per barrel. This spike sharply increased India's oil import bill, weakening the rupee to a historic low of ₹95.40 per US dollar by May. The crisis triggered foreign investor withdrawals and a global flight to the US dollar, further pressuring the rupee. In response, the Reserve Bank of India intervened by selling dollars to stabilize the currency. Meanwhile, India faced LPG shortages and economic challenges across multiple sectors, prompting urgent government actions and accelerating efforts toward energy diversification to reduce future vulnerabilities.