Indian Rupee Faces Pressure Amid Rising Crude Prices and Geopolitical Tensions
USD vs INR: Indian Rupee may depreciate to 96 per US dollar amid rising crude oil prices, global risk
Mint
Image: Mint
The Indian rupee fell to 95.43 against the US dollar on May 5, 2026, driven by geopolitical tensions and rising crude oil prices nearing $113 per barrel. Analysts predict the rupee may depreciate to 96 per dollar, highlighting concerns over India's current account deficit and capital inflows.
- 01The Indian rupee declined to 95.43 against the US dollar amid rising crude oil prices and geopolitical tensions.
- 02Brent crude prices are nearing $113 per barrel, straining India's import costs.
- 03Analysts forecast the rupee may depreciate to 96 per dollar by FY27.
- 04India's current account deficit is expected to widen from 1.1% of GDP in FY26 to 2.5% in FY27.
- 05Sustained currency weakness may trigger further foreign institutional investor (FII) outflows.
Advertisement
In-Article Ad
On May 5, 2026, the Indian rupee weakened by 20 paise to 95.43 against the US dollar, reflecting a broader market sentiment affected by escalating military tensions between the United States and Iran. The rise in Brent crude oil prices, which approached $113 per barrel, has intensified the financial strain on India, a major oil importer. Analysts from UBS Research have indicated that geopolitical uncertainties and high oil prices could lead to a significant widening of India's current account deficit, projected to increase from 1.1% of GDP in FY26 to 2.5% in FY27. This situation has contributed to capital outflows of approximately $18.7 billion during March and April. Despite India's foreign exchange reserves being around $703 billion, usable reserves are estimated closer to $600 billion after accounting for certain liabilities. Experts emphasize that the Reserve Bank of India (RBI) may need to adopt measures from its 2013 crisis toolkit to stabilize the rupee, which is expected to face continued pressure, potentially depreciating to 96 per dollar by FY27.
Advertisement
In-Article Ad
The depreciation of the rupee and rising import costs could lead to higher prices for goods and services in India, affecting consumers and businesses alike.
Advertisement
In-Article Ad
Reader Poll
How do you think rising crude oil prices will affect the Indian economy?
Connecting to poll...
More about Reserve Bank of India
Read the original article
Visit the source for the complete story.




