The rupee plunged to a record low on Friday, breaching the Rs 93 mark for the first time as persistent dollar strength and global risk aversion weighed heavily on the currency.
It weakened to Rs 93.15 against the US dollar in early trade, extending recent losses amid rising geopolitical tensions and a surge in crude oil prices.
The sharp fall comes as investors continue to move towards safe-haven assets, boosting the dollar and putting pressure on emerging market currencies, including the rupee.
Higher crude oil prices have added to the pressure. India, which imports a significant portion of its oil needs, typically sees its currency weaken when oil rises, as it increases the country’s import bill and widens the current account deficit.
Market participants said sustained foreign institutional investor (FII) outflows from Indian equities have also contributed to the decline, with global funds trimming exposure amid uncertainty.
The broader strength in the US dollar follows a cautious stance from the US Federal Reserve, which has signalled limited room for rate cuts, keeping global liquidity tight.
A weaker rupee could push up imported inflation, particularly in fuel and commodities, and may eventually translate into higher costs for businesses and consumers.
Traders will now closely watch crude oil prices, global risk sentiment, and any potential intervention signals from the Reserve Bank of India to stabilise the currency.