At the start of 2026, the Indian economy was thriving, with a projected GDP growth of 7.6% and low inflation at 2.75%. However, the outbreak of conflict in West Asia has drastically altered this outlook, causing Brent Crude prices to spike from around $70 to $110. This energy crisis is not merely a price shock; it has led to supply disruptions, impacting various sectors, including hospitality and energy. The rising crude prices will likely widen India's trade and current account deficits, further straining the economy. The rupee has become one of the worst-performing emerging market currencies, exacerbated by sustained selling from foreign portfolio investors (FPIs). The Reserve Bank of India (RBI) has intervened by capping banks' open rupee positions, temporarily pushing the rupee to around 93, but this relief is unlikely to last without addressing the underlying issues. The future stability of the rupee hinges on either a resolution to the conflict or a significant reduction in FPI selling, both of which are uncertain.