The Indian rupee weakened further on Tuesday, falling to its lowest level in nearly two months as soaring global crude oil prices and sustained demand for the US dollar continued to weigh on the domestic currency. Despite reported intervention by the Reserve Bank of India (RBI), the rupee failed to hold its ground, reflecting the growing pressure on emerging market currencies.
The rupee settled at 96.44 against the US dollar, down 14 paise from the previous close. During the day, it touched an intraday low of around 96.52, marking its weakest level since late May before recovering slightly on suspected RBI dollar sales.
Currency traders said the Indian unit came under pressure as Brent crude oil prices climbed sharply following renewed geopolitical tensions and concerns over global energy supplies. Since India imports more than 85 per cent of its crude oil requirement, higher oil prices directly increase the country’s import bill and raise demand for dollars, putting pressure on the rupee.
The stronger US dollar also added to the rupee’s weakness. Investors continued to favour the greenback amid expectations that US interest rates could remain elevated for longer than anticipated. A stronger dollar generally makes emerging market currencies, including the rupee, less attractive to investors.
Market participants said state-owned banks were seen selling dollars during the trading session, indicating possible intervention by the Reserve Bank of India. Such interventions are aimed at reducing excessive volatility rather than defending a fixed exchange rate.
While the RBI’s action helped the rupee recover from its day’s lowest levels, analysts noted that the central bank cannot completely offset global market forces when crude prices and dollar demand remain elevated.
Apart from rising oil prices, month-end importer demand for dollars also contributed to the rupee’s decline. Indian companies that need to pay for imports, especially crude oil, typically buy large amounts of dollars, increasing pressure on the domestic currency.
Foreign portfolio investment trends also remained mixed. While domestic equity markets have shown resilience in recent weeks, global investors continue to remain cautious due to geopolitical uncertainties, inflation concerns and shifting monetary policy expectations across major economies.
Economists believe that although the rupee has weakened, the movement remains relatively orderly compared with several other emerging market currencies. India’s healthy foreign exchange reserves and the RBI’s active monitoring of the currency market continue to provide confidence against any disorderly depreciation.
A weaker rupee has mixed implications for the Indian economy. Exporters, particularly those in information technology, pharmaceuticals and textiles, may benefit because their overseas earnings translate into higher rupee revenues. However, import-dependent sectors face higher costs, especially companies relying on crude oil, electronics and industrial raw materials.
For ordinary consumers, a weaker currency can eventually translate into higher prices for imported goods, overseas travel and foreign education. More importantly, sustained increases in crude oil prices could push up domestic fuel costs, transport expenses and overall inflation if global prices remain elevated for an extended period.
Analysts expect the rupee to remain under pressure in the near term, with crude oil movements and the strength of the US dollar likely to dictate market direction. Any easing in geopolitical tensions or decline in oil prices could provide relief, while fresh spikes in energy prices may trigger further weakness.
For now, traders believe the RBI will continue to intervene whenever required to smooth excessive fluctuations. However, the broader trend will largely depend on global developments beyond India’s control.
As international markets remain volatile, businesses, importers and investors will be closely watching oil prices, capital flows and central bank actions. Until these factors stabilise, the Indian rupee is likely to continue navigating a challenging path in the foreign exchange market.
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