New Delhi, Mar 12: The Indian currency dropped to a historic level on Thursday, with the rupee record low touching ₹92.36 against the United States Dollar amid rising global uncertainties and higher crude prices.
Market analysts attributed the fall largely to a surge in oil prices and a stronger dollar, which have intensified pressure on emerging market currencies. The jump in energy prices followed attacks on oil tankers in Iraqi waters, raising fears of potential disruptions to global supply chains.
India, which depends heavily on imported crude, is particularly sensitive to such fluctuations. The country purchases more than 80 per cent of its oil from overseas, meaning higher prices increase the import bill and boost demand for dollars by domestic oil companies. This trend typically weakens the rupee.
Another factor weighing on the currency is the strengthening of the dollar in international markets. Investors have been shifting funds into safer assets amid geopolitical tensions, supporting the US currency while pushing several emerging market currencies lower.
Persistent outflows by foreign institutional investors have also contributed to the decline. When overseas investors withdraw capital from Indian equities, they convert rupees into dollars, which increases demand for the American currency and adds pressure on the domestic unit.
A weaker rupee can raise the cost of imports such as energy and electronics, potentially adding to inflationary pressures. However, export oriented sectors including information technology and pharmaceuticals may gain as their foreign earnings translate into higher returns in rupee terms.
Currency markets are expected to remain volatile as investors monitor developments in West Asia, movements in crude oil prices and global capital flows.