The Indian rupee fell to a record low on Thursday, as investors fretted over the economic
risks confronting India from a resurgence in crude oil prices to
2022 highs, threatening the inflation-economic growth balance
for the net energy importer and sapping capital flows.
The currency fell to 95.33 per dollar, down as much as 0.5%
on the day, eclipsing its previous all-time low of 95.21 hit in
late March. It subsequently pared losses to end at 94.91, only
marginally weaker compared to the previous session.
Oil-sensitive Asian peers such as the Indonesian rupiah also
weakened on Thursday, after Brent crude futures climbed
to $126.4 per barrel, the highest in four years, before turning
lower on the day in a volatile session.
The rupee’s fall has wiped out gains spurred by the central
bank’s use of rare currency-supportive regulatory measures late
last month, leaving the currency flat month-on-month even after
it rallied to 92.40 earlier in April.
The reversal has prompted traders and analysts to suggest
that fresh regulatory measures could be on the cards.
If depreciation pressures persist, the Reserve Bank of India
may consider measures to curb oil-related dollar demand from the
spot currency market, curtailing imports of gold and tightening
monetary policy to support the currency, said 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.”
FUNDAMENTAL STRAIN
The rupee has declined nearly over 5% so far in 2026, adding to
similar sized drop last year, in a period where India’s external
sector has faced persistent headwinds ranging from trade
frictions with the U.S. to weakness in capital flows and most
recently, the most severe energy supply disruption in history.
Persistent weakness in the currency may also drive a
negative feedback loop on foreign capital flows by eroding
overseas investors’ returns while adding to inflationary
pressures by lifting import prices, analysts say.
Reflecting that anxiety, foreign investors have offloaded
over $20 billion of Indian stocks and bonds over March and April
so far, nearly double the $11.8 billion of outflows from the
same markets over all of 2025.
“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,” analysts at Barclays said in a note.
The rupee came under additional pressure on Thursday as a
hawkish tilt in the U.S. Federal Reserve’s policy decision added
to the strain from the rally in oil prices.
The U.S. is pushing for other countries to form a coalition to
restore the freedom of navigation in the Strait of Hormuz.
Published on April 30, 2026
