The Indian Rupee weakened beyond 93 per Dollar for the first time on Friday, as growing concerns mounted over the impact of Iran war-related disruptions to global energy supplies on Asia’s third-largest economy.
The currency dropped roughly 0.7% to 93.2750 against the US Dollar, surpassing its previous record low of 92.63 reached on Wednesday.
Since the outbreak of the Iran war, the Rupee has declined by more than 2%, driven by fears that a sustained rise in crude oil prices could hinder economic growth and fuel inflation in the world’s third-largest oil-importing and consuming country.
The oil price shock has led foreign investors to withdraw over $8 billion from Indian equities this month, marking the biggest outflow since January 2025, Reuters reports.
With the conflict showing no signs of easing, having claimed thousands of lives, expanded across the Middle East, and disrupted global energy supplies, the Rupee appears increasingly fragile and may weaken further toward 95 per Dollar.
“INR could be more vulnerable if the conflict drags on, which mainly reflects its exposure to higher energy prices,” according to Vivek Rajpal, Asia macro strategist at JB Drax Honore.
“Currencies backed by strong policy frameworks and external balances should remain relatively resilient while energy dependent currencies are likely to stay vulnerable.”
Oil prices rose to almost $120 a barrel before easing on Friday, as several countries signalled willingness to help ensure safe maritime transit through the Strait of Hormuz.
Meanwhile, the Rupee has been under sustained pressure for more than a year, battered by factors such as trade tensions with the US, conflicts in major energy-producing regions, and heavy foreign selling in equities, prompting investors to increase bearish bets on the currency.
Over the past year, the Rupee has fallen 7% against the Dollar and has also declined significantly versus the Euro, British Pound, and Chinese Yuan.
The recent oil shock has further pressured Indian markets, pushing stocks to their lowest levels in almost a year, driving up bond yields, and raising concerns about expanding fiscal and current account deficits.
Notably, regular intervention by the central bank has helped cushion the Rupee’s decline, allowing it to weather the shock better than peers like the Korean Won and Thai Baht.
The Reserve Bank of India is estimated to have been a net seller of more than $50 billion between April and December 2025, with analysts expecting that figure to rise further this year.