India's efforts to stabilize the rupee are facing mounting challenges as capital inflows diminish and oil prices remain elevated due to the ongoing US-Iran conflict. The Reserve Bank of India (RBI) has implemented measures to curb speculation, yet the rupee fell to a record closing low of 94.85 against the dollar. Analysts from Kotak Mahindra Bank project a balance of payments deficit of $50 billion for this fiscal year, significantly higher than the deficits of $39 billion and $5 billion in the previous two years. The RBI's reliance on dollar sales has limited its flexibility, especially with a negative forward book of $78 billion. With foreign investors pulling nearly $20 billion from Indian equities in the first four months of 2026, the outlook remains bleak. Analysts suggest that if oil prices average between $85 and $90 a barrel, the RBI may need to consider easing borrowing rules to attract dollar inflows. Overall, the consensus indicates that the rupee is likely to continue on a weaker trajectory.