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.