The Indian Rupee has fallen to an unprecedented low, reaching 95.6275 per US Dollar, a decrease of 32 paise. During trading, it hit an all-time low of 95.7375, surpassing the previous record of 95.4325. Market analysts attribute the decline to tensions between the US and Iran regarding the West Asia conflict, which has driven up crude oil prices and triggered substantial foreign portfolio investment (FPI) withdrawals from Indian stock markets.
As a response to the depreciation, the Reserve Bank of India is believed to have stepped in, resulting in a slight recovery of the Rupee. Forex market specialists have warned that if the current trend continues, the Indian currency may exceed the 96-per-dollar threshold within the next three to four trading sessions.
Brent crude oil prices have surged nearly 3% to $107 per barrel amid ongoing uncertainties surrounding the West Asia situation. On just one day, foreign investors divested $822 million, creating heightened demand for dollars among custodial banks to facilitate repatriations.
CareEdge Ratings reported that since the outbreak of the West Asia conflict, most currencies have depreciated against the US dollar, with notable exceptions like the Brazilian Real, Chinese Yuan, and British Pound. The report highlights that currencies such as the Philippine Peso, Indian Rupee, South African Rand, Thai Baht, Korean Won, and Indonesian Rupiah have suffered particularly steep declines, largely due to these nations’ dependence on energy imports from West Asia.
The report further indicates that Asian currencies have been more adversely affected than their global counterparts due to the ongoing crisis. While such depreciation is considered anticipated in light of rising energy prices and capital shifting towards safer assets like the US dollar, the persistent weakness of the Rupee has become a growing concern even prior to the escalation of the conflict.
“Weak capital flows over the past year have significantly contributed to the downward pressure on the Rupee. The recent intensification of tensions in West Asia has only exacerbated this trend. The Rupee has depreciated 11% over the past year, with 4.7% of that decline occurring since hostilities began,” the report stated.
In related economic indicators, the yield on the benchmark 10-year Government Security (6.48% GS2035) rose to 7.0458%, up from 7.03% the previous day, driven by increasing global oil prices. This upward trajectory in yields could persist, particularly following the rise in April’s retail inflation rate, which edged up to 3.5% from 3.4% in March.
Dipanwita Mazumdar, an economist at Bank of Baroda, noted, “India remains relatively insulated from global inflationary shocks for now due to regulated fuel price controls. However, caution is needed regarding food inflation, weather impacts, and geopolitical factors.”
The article was published on May 12, 2026.
