Rupee slipped past the crucial 96-mark and hit a fresh all-time low of 96.14 against the US dollar in intraday trade on Friday, as soaring crude oil prices, escalating tensions in West Asia and persistent foreign capital outflows intensified pressure on the currency.At the interbank foreign exchange market, the rupee opened at 95.86 and weakened sharply to touch a record low of 96.14, falling 50 paise from its previous close.The rupee had already weakened to a fresh lifetime low of 95.96 on Thursday before settling at 95.64 against the dollar.Forex traders said the USD/INR pair remains under severe pressure amid rising oil prices, a widening trade deficit, weak foreign direct investment inflows and continued global uncertainty.Also read: Rupee under strain! Will the Indian currency continue its free fall against US dollar or recover?
Why the rupee is under pressure
The latest pressure on the rupee comes largely from the escalating conflict involving the US, Israel and Iran, along with the renewed crisis around the Strait of Hormuz, one of the world’s most critical oil shipping routes.India imports more than 85 per cent of its crude oil requirements and remains highly vulnerable to any disruption in global energy supplies.Global crude oil prices also surged close to above $100 per barrel amid fears of supply disruptions linked to geopolitical tensions involving Iran. Brent crude, the global oil benchmark, rose 3.20 per cent to USD 109.20 per barrel in futures trade on Friday.Analysts said rising crude prices increase India’s import bill, push up demand for dollars and weaken the rupee. According to a Morgan Stanley report, “as of early 2026, India imported about 85 per cent of its crude oil and roughly 50 per cent of its natural gas requirements. Such reliance on foreign energy makes India’s economy vulnerable to commodity price spikes and supply disruptions arising from geopolitical conflict.“Forex traders also pointed to persistent foreign capital outflows and weak net FDI inflows as key reasons behind the rupee’s decline.The dollar index, which measures the strength of the US currency against a basket of six major currencies, rose 0.47 per cent to 99.28, adding further pressure on emerging market currencies, including the rupee.“We expect the rupee to trade with a negative bias on elevated crude oil prices and inflation concerns. Strong dollar and FII outflows may also weigh on the rupee. However, any intervention by the RBI and hiking of import duty on gold and silver may support the rupee at lower levels. USD-INR spot price is expected to trade in a range of 95.60 to 96.20,” Anuj Choudhary, Research analyst at Mirae Asset ShareKhan told PTI.Indian equity markets also traded weak amid global uncertainty. Sensex fell 130.74 points, or 0.17 per cent, to 75,267.98, while the Nifty slipped 17.60 points, or 0.07 per cent, to 23,672.00 during trade.Other Asian markets also closed lower. Japan’s Nikkei 225 index fell 2.70 per cent, Hong Kong’s Hang Seng declined 1.73 per cent, Taiwan’s weighted index dropped 1.41 per cent, while South Korea’s KOSPI index plunged 6.52 per cent.
