Rupee Plunges to Record Low of 94.7 Against US Dollar Amid Energy Crisis

Indian Rupee Hits Record Low, on Track for Fiscal-Year Drop

The Indian rupee has hit a record low of 94.7 per dollar, down 0.75% from its previous closing price. This decline marks the rupee's first fiscal-year drop in over a decade, with the currency down 4% since the Middle East war began last month and 10% since March 31, 2025.

India's fiscal year runs from April to March. The last comparable drop was in 2011-12, when the rupee declined by nearly 14% due to global risk-off concerns and weakness in India's external sector.

The ongoing war has disrupted global energy supplies, sending oil prices soaring and curtailed key exports from the Middle East. This has led to a decline in global equities and an increase in bond yields, with investors fretting over inflation and the hit to government finances.

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On Friday, India's benchmark equity index, the Nifty 50, fell 1.5%, while the yield on the 10-year benchmark bond surged as much as 9 basis points to 6.96%, the highest since August 2024.

Analysts have revised growth forecasts for India, pencilled in weaker forecasts for the rupee, and anticipate potential rate hikes by the Reserve Bank of India over the next 12 months as spillovers from the crisis threaten to lift inflation.

Bernstein sees a realistic chance of the rupee breaching the 98-per-dollar level this year, with pressure primarily stemming from India's current account balance. Societe Generale recommends shorting the rupee against the dollar, with a target of 96.