The Indian rupee extended its losing streak on Tuesday, slipping to a record low of 95.63 against the US dollar in early trade. The currency remained under pressure from rising oil prices, intensifying geopolitical tensions, and fragile investor sentiment.
Previous Session and Market Sentiment
The decline follows an already weak session on Monday, when the rupee fell 82 paise to close at 95.31. Sentiment was further rattled as the Middle East conflict continued to intensify, with US President Donald Trump stating that the ceasefire was "hanging on life support." Meanwhile, the Strait of Hormuz continues to be squeezed, with disruptions now exceeding 70 days, pushing oil prices higher.
Oil Price Surge
Brent crude futures were up 30 cents, or 0.29%, at $104.51 a barrel, while US West Texas Intermediate rose 31 cents, or 0.32%, to $98.38 at 0002 GMT. Both benchmarks had already surged nearly 2.8% in the previous session on Monday.
Impact on Domestic Markets
Dalal Street reflected the weak sentiments, with benchmarks Sensex and Nifty50 opening in the red. The NSE Nifty50 tanked 174 points to 23,641.20, while the BSE Sensex dipped to 75,370.21, shedding 645.07 points by 9:35 am.
Government Appeals and Forex Reserves
Adding to the pressure, Prime Minister Narendra Modi's appeal on Sunday urging citizens to reduce gold purchases, fuel consumption, and foreign travel to conserve foreign exchange reserves also weighed on currency market sentiment. On Monday, the rupee opened at 94.97 in the interbank foreign exchange market and moved between 94.87 and 95.34 during the session before settling at 95.31 (provisional), compared with 94.49 on Friday.
Factors Behind Rupee Weakness
Forex traders said that weakness in the rupee was further triggered by a stronger US dollar and sustained foreign capital outflows. India's foreign exchange reserves also came under pressure, declining by $7.794 billion to $690.693 billion in the week ended May 1, as per data released by the Reserve Bank of India. In the previous week ended April 24, reserves had fallen by $4.82 billion to $698.487 billion.
Market Outlook
Market participants said the combination of global geopolitical uncertainty, rising crude oil prices, a strong dollar, and continued foreign fund outflows is keeping the rupee under sustained pressure.
