Indian Rupee Hits Record 95.7375 as $107 Oil and $20 Billion Outflows Deepen Pressure
Updated
Updated · Reuters · May 12
Indian Rupee Hits Record 95.7375 as $107 Oil and $20 Billion Outflows Deepen Pressure
7 articles · Updated · Reuters · May 12
95.7375 per dollar marked a new record low for the rupee on Tuesday before it closed at 95.6275, down 0.3%, with traders saying the Reserve Bank of India likely stepped in to curb steeper losses.
$107.4 Brent crude and fading hopes for a U.S.-Iran peace deal drove the latest selloff, extending pressure on oil-importing Asian currencies as the rupee has weakened nearly 5% since the war began on Feb. 28.
More than $20 billion has left Indian equities since the conflict started, including nearly $900 million on Monday, worsening concerns that high oil prices will widen India's current account deficit and keep the currency under strain.
97.5 is ANZ's new December target for the rupee, while BMI warned it could slide to 100 if the war worsens; Modi has already urged Indians to curb fuel use, travel and imports to conserve foreign exchange.
With its currency in freefall, can India truly insulate its economy from Middle East conflicts?
Are India's emergency import curbs a viable defense for the rupee or a desperate last-ditch gamble?
As two vital shipping routes are choked, is the era of seamless global trade officially over?
The Indian Rupee’s Steep Decline: Oil Shocks, Capital Flight, and the Road to Recovery
Overview
The Indian Rupee is facing significant weakening due to a combination of underlying vulnerabilities and sustained pressure in foreign exchange markets. This decline is mainly triggered by a surge in global crude oil prices, which is driven by escalating geopolitical tensions in West Asia, especially the ongoing Iran conflict. Higher oil prices are widening India’s current account deficit, putting the rupee under continuous strain. At the same time, the prospect of continued weak capital inflows adds to the pressure, highlighting how global events and domestic economic challenges are closely linked in driving the rupee’s recent plunge.