Indian Rupee Falls to Record Low as Oil Prices Surge
Rupee hits fresh low past 95/$ as oil surge pushes bond yields above 7%
Business StandardImage: Business Standard
The Indian rupee has hit a record low of 95.34 per dollar amid rising crude oil prices, which have surged past $126 per barrel due to geopolitical tensions. The yield on the benchmark 10-year government bond also increased to 7.07%. Analysts warn that without capital inflows, the rupee will remain under pressure.
- 01The rupee reached a low of 95.34 against the dollar, marking a new record.
- 02Benchmark 10-year government bond yields surged to 7.07%.
- 03Rising Brent crude oil prices, now above $126 per barrel, are impacting the rupee's value.
- 04The Reserve Bank of India's (RBI) net short position in the forward market exceeded $100 billion.
- 05Experts predict continued depreciation of the rupee due to a widening current account deficit.
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On Thursday, the Indian rupee fell to a new record low of 95.34 per dollar, driven by a surge in crude oil prices that reached $126 per barrel amid ongoing geopolitical tensions. The yield on the benchmark 10-year government bond also rose, hitting 7.07% during the day. The Reserve Bank of India's (RBI) latest data revealed a net short position in the forward market exceeding $100 billion, adding pressure to the rupee. Analysts, including Abhishek Goenka, noted that the correlation between crude oil prices and the rupee is strengthening, suggesting that the rupee's decline reflects broader macroeconomic risks. The rupee has depreciated 5.31% against the dollar in 2026 so far, with experts warning that without significant capital inflows, the currency will continue to struggle. The RBI's ability to stabilize the rupee through dollar sales is limited due to its large forward book, which has fallen to below nine months of import cover, indicating a precarious position against external shocks.
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The depreciation of the rupee is likely to increase import costs, which could lead to higher prices for consumers, especially for fuel and essential goods.
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