Rupee Slumps to Record Low of 95.85 Against US Dollar Amid Rising Oil Prices and Middle East Conflict

Rupee continued to tumble on Thursday, slumping 0.1% paise to 95.85 against US dollar in early trade. The currency has been continuously dragged down by rising crude oil prices and ongoing Middle East conflict. With this, the currency has recorded fall of 1.4% this week, breaching multiple record lows, according to Reuters. This comes after the currency had already touched a fresh all-time low of 95.80 on Wednesday, before closing at 95.66. Currency traders noted that intervention by the Reserve Bank of India, along with the government’s move to tighten gold imports through higher tariffs, helped prevent sharper depreciation. However, the broader outlook for rupee remained largely vulnerable to oil price movements and geopolitical developments. At Wednesday’s interbank forex session, the rupee had opened stronger at 95.52, up 16 paise from its previous record closing low. During volatile trading, it moved between 95.51 and 95.80 before ending the day 2 paise higher than its prior close. On Tuesday, the rupee had dropped 40 paise to settle at a record low of 95.68. The currency’s slide has made it Asia’s weakest performer this year, with losses exceeding 6%, according to traders. Earlier in 2025, the currency had already fallen a whopping 5%. To curb pressure on foreign exchange reserves, the government increased import duties on gold and silver from 6% to 15%. Traders said the move could reduce purchases in India, one of the world’s biggest consumers of precious metals. Earlier on Sunday, PM Narendra Modi had appealed to citizens to avoid buying gold for a year in an effort to protect foreign exchange reserves, given India’s heavy reliance on imported precious metals. The dollar index, which tracks the US currency against six major peers, rose 0.22% to 98.51. Anuj Choudhary, Research analyst at Mirae Asset ShareKhan told PTI, "We expect the rupee to trade with a negative bias amid rising crude oil prices, concerns over inflation and geopolitical tensions between the US and Iran. However, any intervention by the RBI may support the rupee at lower levels. USDINR spot price is expected to trade in a range of 95.45 to 96.15.” Adding to pressure on domestic markets, Foreign Institutional Investors sold equities worth Rs 4,703.15 crore on Wednesday. Meanwhile Dalal Street began the session on a positive note. Indian equity benchmarks inched 0.5% higher, despite rising crude oil prices. While Nifty50 was above 23,500, BSE Sensex rose over 300 points in opening trade. At 9:16 am, Nifty50 was trading at 23,519.75, up 107 points or 0.46%. BSE Sensex was at 74,869.76, up 261 points or 0.35%. The currency has continued to slide ever since the Middle East crisis broke out on February 28, when the US and Israel launched strikes on Iran. After the attack, Tehran tightened its noose on the strategically crucial Strait of Hormuz, a global oil pipeline that carries 20% of the world's energy supplies.