Oil Shock Hits Rupee: Indian Currency Falls To 95.08 Amid Global Risk-Off Mood

The rupee came under renewed pressure on Wednesday, slipping 34 paise to close at 95.08 against the US dollar, as a sharp rise in crude oil prices and escalating geopolitical tensions unsettled global markets.

The Indian currency opened at 94.80 against the dollar and briefly touched the same level as its intra-day high before weakening to 95.22 during the session. It eventually recovered some ground to settle at 95.08, compared with Tuesday’s close of 94.74.

The immediate trigger was a surge in crude prices. Brent crude crossed the $100-per-barrel mark for the first time in nearly six weeks, raising concerns that higher energy costs could add to inflationary pressures and increase India’s import bill.

Brent futures were trading 2.94 per cent higher at $100.73 a barrel after attacks on oil facilities and ships in West Asia threatened to disrupt an already strained supply chain amid growing US-Iran tensions.

The pressure on the rupee was compounded by weak domestic equities and foreign institutional investor (FII) outflows. FIIs sold Indian equities worth ₹123.19 crore on a net basis on Tuesday, according to exchange data.

“The rupee declined today on rising crude oil prices and risk aversion in global markets,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan. He noted that the currency recovered some of its initial losses as the dollar remained relatively weak.

The dollar index, which measures the US currency against six major currencies, was at 98.84, up 0.05 per cent.

Indian equities also reflected the heightened risk aversion. The Sensex plunged 813.35 points to 74,764.23, while the Nifty fell 203.60 points to 23,431.50.

Market watchers expect the rupee to remain under pressure if crude prices stay elevated or geopolitical tensions worsen, particularly as higher oil costs could further strain India's external finances.