The Indian rupee continued its downward spiral on Thursday, declining 0.1% to 95.85 against the US dollar in early trade. The currency remained under pressure due to surging crude oil prices and the ongoing conflict in the Middle East, according to Reuters. This latest drop has resulted in a 1.4% fall for the week, with the rupee breaching multiple record lows.
On Wednesday, the rupee had already touched a fresh all-time low of 95.80 before closing at 95.66. Currency traders noted that intervention by the Reserve Bank of India (RBI), coupled with the government's decision to tighten gold imports through higher tariffs, helped prevent a sharper depreciation. However, the broader outlook for the rupee remains highly vulnerable to oil price movements and geopolitical developments.
During Wednesday's interbank forex session, the rupee opened stronger at 95.52, gaining 16 paise from its previous record closing low. In volatile trading, it fluctuated between 95.51 and 95.80 before ending the day 2 paise higher than its prior close. On Tuesday, the rupee had dropped 40 paise to settle at a record low of 95.68.
The currency's slide has made it Asia's weakest performer this year, with losses exceeding 6%, according to traders. Earlier in 2025, the rupee had already fallen by a significant 5%.
To ease pressure on foreign exchange reserves, the government increased import duties on gold and silver from 6% to 15%. Traders suggested that this move could reduce purchases in India, one of the world's largest consumers of precious metals. Over the weekend, Prime Minister Narendra Modi appealed to citizens to avoid buying gold for a year, aiming to protect foreign exchange reserves given India's heavy reliance on imported precious metals.
The dollar index, which measures the US currency against six major peers, rose 0.22% to 98.51.
Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, told PTI, "We expect the rupee to trade with a negative bias amid rising crude oil prices, concerns over inflation, and geopolitical tensions between the US and Iran. However, any intervention by the RBI may support the rupee at lower levels. The USDINR spot price is expected to trade in a range of 95.45 to 96.15."
Adding to the pressure on domestic markets, Foreign Institutional Investors sold equities worth Rs 4,703.15 crore on Wednesday. Meanwhile, Dalal Street began the session on a positive note. Indian equity benchmarks inched 0.5% higher despite rising crude oil prices. The Nifty50 was above 23,500, while the BSE Sensex rose over 300 points in opening trade. At 9:16 am, the Nifty50 was trading at 23,519.75, up 107 points or 0.46%, and the BSE Sensex was at 74,869.76, up 261 points or 0.35%.
The currency has been sliding ever since the Middle East crisis erupted on February 28, when the US and Israel launched strikes on Iran. Following the attack, Tehran tightened its grip on the strategically crucial Strait of Hormuz, a global oil pipeline that carries 20% of the world's energy supplies.
