Rupee Plunges to Record Low of 95.31 Against US Dollar

The Indian rupee plummeted 0.9% to a record low of 95.31 against the US dollar on Monday, driven by surging crude oil prices and escalating US-Iran tensions. The decline was the rupee's steepest one-day fall since March 27.

The currency slide came after US President Donald Trump rejected Iran’s response to a proposed peace deal, fuelling fears over prolonged disruptions in global energy supplies through the Strait of Hormuz.

Brent crude rose 2.5% to $103.8 per barrel, while the yield on India’s benchmark 10-year bond rose 6 basis points. The selloff also affected Indian markets, with benchmark equity indices dropping 1.5% and government bond prices weakening.

According to ANZ analysts, structurally weak external funding conditions mean even a small widening of the current account deficit will continue to put pressure on the INR and FX reserves. India’s forex reserves stood at $690.69 billion as of May 1, down from the record high of $728 billion touched in February.

The Indian government is likely to respond to the situation, with Prime Minister Narendra Modi already calling for measures such as fuel conservation, reduced imports, and lower travel consumption to mitigate the impact of rising oil prices on the economy. The situation will be closely monitored in the coming days, with the government and regulators expected to take steps to stabilize the currency and manage the economic fallout.