The Indian rupee is set to open near a Rupee Record Low on Friday at 92.90 per dollar, pressured by elevated oil prices and geopolitical tensions, though easing crude prices are expected to limit further losses.
The rupee is poised to weaken after closing at 92.63 against the U.S. dollar on Wednesday, with domestic money markets shut Thursday for a local holiday. The one-month non-deliverable forward market indicates a softer opening, tracking global currency and commodity moves.
The offshore dollar/rupee forward rose to as high as 93.80 on Thursday, signaling potential sharp depreciation. The spike followed a surge in oil prices triggered by escalating tensions in the Middle East after Iran retaliated against an Israeli strike, hitting Qatar’s Ras Laffan Industrial City, a key liquefied natural gas hub.
At its peak, the forward market suggested the rupee could open between 93.30 and 93.40. However, the currency pared some losses as oil prices cooled from recent highs, reducing immediate pressure on India’s import-heavy economy.
Brent crude, which briefly approached $120 per barrel, retreated to about $105.20. The decline came after major European nations and Japan signaled plans to secure shipping routes through the Strait of Hormuz, a critical energy corridor, while the United States outlined steps to boost oil supply.
Comments from U.S. President Donald Trump also weighed on crude prices, influencing currency sentiment as markets reacted to the looming Rupee Record Low scenario. He said he had urged Israel to avoid further attacks on Iranian gas infrastructure, helping calm fears of prolonged supply disruptions. The dollar index climbed to 100.30 before slipping below 99.50, while U.S. equity futures recovered part of earlier losses.
Despite the pullback in oil, analysts said the broader outlook for the rupee remains fragile. “The worst of the oil shock appears to have faded, offering some relief,” said a currency trader at a Mumbai-based bank. “But uncertainty over geopolitical developments will continue to weigh on the rupee and likely require support from the Reserve Bank of India.”
Markets React as Foreign Investors Extend Equity Outflows
Indian equity markets have already shown signs of stress. Stocks fell about 3% on Thursday, even as currency markets were closed, reflecting investor concerns over rising energy costs and geopolitical risks.
Foreign portfolio investors pulled out more than $800 million from Indian equities, extending a broader trend that has intensified concerns about a Rupee Record Low if outflows persist. India, as a major oil importer, remains particularly vulnerable to higher crude prices, which widen the current account deficit and increase inflation risks.
Crude Retreat and Policy Signals Offer Partial Relief
Still, easing oil prices and coordinated global responses have provided some breathing room. Efforts to secure shipping lanes and boost supply have reduced fears of immediate shortages, helping stabilize markets.
Traders expect the Reserve Bank of India to step in if volatility intensifies to prevent a deeper slide beyond the current Rupee Record Low. The central bank has previously intervened to smooth sharp currency movements, and market participants are closely watching oil prices and geopolitical developments that could push the rupee toward fresh lows.
