Rupee slipped 35 paise to hit a record low of 95.63 against the US dollar on Tuesday, 12 May, as concerns over a weakening ceasefire in the Middle East pushed oil prices higher, heightening worries for the import-dependent economies such as India.
As per a PTI report, in the interbank foreign exchange market, the rupee started at 95.57 against the greenback and subsequently dropped to an unprecedented low of 95.63, a decline of 35 paise from its previous closing value.
On Monday, the rupee plummeted 79 paise to end at a historical low of 95.28 against the US dollar.
The rupee has faced pressure since the outbreak of the Iran conflict in late February, which sent oil prices soaring. Any temporary recovery phases have primarily been supported by sporadic interventions from the central bank.
The outlook remains unstable, as progress in US–Iran negotiations has been minimal. While both parties reached a ceasefire agreement on 8 April, recent comments from US President Donald Trump suggest that the truce might be deteriorating.
On Monday, Trump remarked that the ceasefire was “on life support,” pointing to disagreements over essential demands, such as a stop to hostilities on various fronts, the removal of a US naval blockade, the revival of Iranian oil exports, and reparations for war-related damage.
According to market experts, the recent surge in Brent crude above $102 per barrel has reignited concerns around India’s external stability, as higher oil prices widen the import bill, increase dollar demand, and put pressure on the rupee. They note that comments by Prime Minister Narendra Modi on fuel conservation, lower imports, and reduced overseas spending have been interpreted as a signal of rising concerns around the trade deficit and balance of payments.
Despite improving global sentiment, experts note that India has lagged its emerging-market peers. According to data from the Institute of International Finance, EM inflows rebounded strongly in April, but India recorded over $22 billion in equity outflows, reflecting persistent investor caution.
Going ahead, analysts expect markets to track geopolitical developments, including Trump’s engagements, as well as inflation data in India and the US. While headline inflation may ease toward the RBI’s 4% target, risks remain from potential second-round effects of elevated crude prices.
Rupee: Technical Views
Amit Pabari, MD, Research Team, CR Forex Advisors, said that technically, the 94.00–94.20 zone is likely to act as a strong support for USD/INR, while 95.50 remains a key resistance level. A sustained breakout above 95.50 could trigger a sharp upside move of around 50 paise in the currency pair.
Can rupee touch 100?
According to Jigar Trivedi, Senior Research Analyst at IndusInd Securities, the Indian rupee fell to its weakest level on record on Tuesday as investors fretted over a fraying ceasefire in the Middle East, which sparked a fresh rise in oil prices, deepening worries over the economic hit to a net energy-importing economy.
Trivedi said that the rupee is likely to depreciate in the coming months amid ongoing dollar demand. Rising crude oil and gold is keeping the rupee under pressure.
“Year to date, the Indian Rupee has dropped by more than 6%, and in the short term, levels around 96 and 97 are resistance. In the extreme scenario of an escalating war between the US and Iran, if WTI oil hits $120/bbl, the rupee could approach 100, putting the economy at risk,” said Trivedi.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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