The Indian rupee reached a record low on Thursday, as investors expressed concerns over economic risks facing India amidst a resurgence in crude oil prices, which climbed to highs not seen since 2022. This was particularly alarming for the net energy importer, as it jeopardized the balance between inflation and economic growth while diminishing capital inflows.
The currency slipped to 95.33 per dollar, declining by as much as 0.5% during the day, surpassing its previous record low of 95.21 reached in late March. It later recovered slightly, closing at 94.91, only marginally weaker than in the previous session.
Other Asian currencies sensitive to oil fluctuations, including the Indonesian rupiah, also weakened as Brent crude futures soared to $126.40 per barrel, the highest level in four years, before declining during a volatile trading session.
The rupee’s depreciation has erased gains from the Reserve Bank of India’s implementation of exceptional currency-supportive measures late last month, leaving the currency essentially flat month-on-month, despite an earlier rally to 92.40 in April.
Market participants are now speculating that additional regulatory actions could be forthcoming. If pressures on the rupee continue, the Reserve Bank of India might implement measures to reduce oil-related dollar demand in the spot currency market, limit gold imports, and tighten monetary policy to stabilize the currency, according to Vivek Rajpal, Asia macro strategist at JB Drax Honore. “India’s historical patterns also show that higher oil prices often feed into inflation and eventually force the Reserve Bank of India to respond,” he added.
The rupee has depreciated by over 5% so far in 2026, compounding a similar drop from the previous year, during which India’s external sector has faced ongoing challenges, including trade tensions with the U.S., fluctuations in capital flows, and significant energy supply disruptions.
Sustained currency weakness may exacerbate the negative feedback loop on foreign capital flows by diminishing returns for overseas investors and heightening inflationary pressures through increased import prices. This concern is reflected in recent data indicating that foreign investors have withdrawn more than $20 billion from Indian stocks and bonds in March and April, nearly double the $11.8 billion of outflows recorded for the entirety of 2025.
Barclays analysts noted, “After breaking through the key psychologically important level of USD/INR 95.0, risks of further INR weakness remain, with potential to hit our 2026 year-end forecast of 96.80 sooner than expected.” The rupee also faced added pressure on Thursday due to a hawkish stance from the U.S. Federal Reserve, further amplifying the challenges posed by rising oil prices. Additionally, the U.S. is advocating for an international coalition to ensure navigation freedom in the Strait of Hormuz.
Published on April 30, 2026.
