On Friday, the Indian rupee fell below the 94.7 level against the US dollar. This is its weakest level so far. While this may not seem like a huge figure, it reflects the growing pressures that have been building over the past few weeks—pressures that have become difficult to ignore. The rupee has quietly emerged as a key indicator of rising economic tensions within the country.
Oil prices: main reason
At present, the most important factor increasing this trend is the rise in crude oil prices. Amid ongoing geopolitical tensions in West Asia, oil prices have once again risen to nearly $110 per barrel. Along with this, the price of India’s crude oil basket has also reached around $157 per barrel. Given that India imports 85–90% of its oil needs, this increase in prices has a direct and immediate impact on the economy.
Expensive oil further increases pressure on rupee
Rising oil prices mean that India has to spend more dollars to import the same amount of oil. This increased demand for dollars puts downward pressure on the rupee. Moreover, global capital is currently moving out of India.
Withdrawals by foreign investors
Foreign investors have pulled out about $9.5 billion from Indian equity markets in recent weeks, according to Reuters estimates. In uncertain environments, investors turn to safer markets, such as the United States. When investors exit a market, they sell their Indian assets and convert the proceeds from rupees to dollars; This process increases the pressure on the rupee even further.
Strengthening dollar: another reason
The US dollar also continues to strengthen, supported by higher bond yields and increased demand for safe-haven investments. With the dollar strengthening like this, it is becoming more difficult for currencies like the rupee to maintain their stability.
The decline became more rapid over time
If we look at the last few years, this decline is even more clearly visible. At the beginning of 2022, the rupee was at around 74 against the dollar; Now it has reached close to 95 level. This means that the rupee has depreciated by about Rs 20 in four years. In the last one year alone, the value of the rupee has fallen by more than 10%. According to some estimates, if these pressures continue, the rupee may fall further, reaching 98 against the dollar.
Impact on India’s economy
The impact of rupee weakness is not limited to the exchange rate alone. India’s import bill may rise to nearly $911 billion in FY27; Earlier, this figure was around $814 billion. Meanwhile, the current account deficit is expected to increase to 2.6% of GDP. This means more dollars are flowing out of the country—a factor that puts further pressure on the rupee.
What effect will this have on the common man?
Imports become expensive due to weakening of rupee. This includes oil, electronics, fertilizers and other essential commodities. Its effects gradually become visible: fuel prices increase, transportation costs increase, and food items also become expensive. Additionally, students studying abroad have to pay more.
