The Indian rupee declined to an all-time low on Friday, reaching 96.1350 per U.S. dollar, as escalating oil prices approached $110 per barrel, exacerbating economic challenges for the country, which ranks as the third-largest crude importer globally. This decline marks a 0.4% drop, surpassing a previous low of 95.9575 hit in the prior session. By the end of the day, the rupee was down 1.5% week-on-week, and it has depreciated over 6% since the beginning of the year, making it the worst-performing currency in Asia amid ongoing capital outflows and concerns regarding balance of payments, exacerbated by the ongoing conflict in Iran affecting energy costs.
Brent crude futures increased by more than 3% to $109 per barrel on Friday, raising fears of global inflation and prompting an uptick in bond yields due to heightened expectations of interest rate increases later this year. Khoon Goh, head of Asia Research at ANZ, noted in a report that prolonged conflicts typically result in “higher inflation, weaker economic growth, and a deterioration in external balances, particularly for large net energy importers.” He suggested that regional central banks might be compelled to tighten monetary policy both to counteract inflationary pressures and stabilize exchange rates.
Asian currencies overall fell between 0.3% and 0.8%, while regional equities declined by more than 2%.
Data released on Friday highlighted India’s merchandise trade deficit, which increased to $28.38 billion in April amid the Middle East conflict that disrupted shipments and made energy imports more expensive. With India relying on imported crude oil for over 80% of its needs and 60% of its cooking gas, the situation remains critical. The trade report followed data indicating that India’s wholesale inflation surged to a three-and-a-half-year high in April.
Goldman Sachs economists, following minor retail fuel price increases on Friday, predict that India’s consumer inflation will average around 4% in May. They also forecast two potential interest rate increases of 25 basis points each in October and December. India’s 10-year bond yield rose to a five-week high of 7.07%, an increase of 9 basis points for the week, while the benchmark equity index, Nifty 50, experienced a decline exceeding 2% week-on-week.
Published on May 15, 2026.
