The Indian rupee has plummeted to a new all-time low of 94.88 against the US dollar, primarily due to escalating Brent crude oil prices and sustained foreign institutional investor outflows, signalling continued pressure on the domestic currency.
Illustration: Dominic Xavier/Rediff
Key Points
- The rupee closed at a new all-time low of 94.88 against the US dollar, depreciating by 20 paise.
- Rising Brent crude oil prices, nearing $115 per barrel, are a significant factor impacting India’s import costs and pressuring the rupee.
- Continued foreign institutional investor (FII) outflows have further weakened investor sentiment and contributed to the rupee’s decline.
- Analysts predict the USD-INR pair will trade between 94.10 and 95.15 with a positive bias, indicating further potential weakness for the rupee.
- The UAE’s decision to leave OPEC effective May 1 adds another layer of uncertainty to global oil markets, potentially affecting crude prices.
The rupee depreciated 20 paise to close at its all-time low of 94.88 against the US dollar on Wednesday, pressured by rising Brent crude oil prices, hovering around $115 per barrel, and continued foreign capital outflows.
Forex traders said the elevated crude oil price is likely to sharply impact India’s import costs, while the ongoing West Asia crisis and concerns over potential wider conflict are fuelling investor anxiety.
Factors Driving Rupee’s Decline
Also, analysts said that investors were awaiting cues from the upcoming US Federal Reserve policy decision.
Moreover, heavy foreign institutional investor (FII) selling so far this year further dented investor sentiment.
At the interbank foreign exchange market, the rupee opened at 94.79 against the US dollar, then lost ground and declined to 94.88 against the US dollar during the session.
It finally settled for the day down 20 paise at 94.88, the lowest-ever closing level.
On Tuesday, the rupee depreciated by 53 paise to close at 94.68 against the US dollar.
The rupee’s previous all-time low closing level of 94.85 versus the US dollar was recorded on March 27 this year.
The unit touched its lowest-ever intraday level of 95.22 against the greenback on March 30.
Expert Analysis and Outlook
Dilip Parmar – Senior Research Analyst, HDFC Securities, said, “The Indian rupee hit a record low close as rising crude oil prices and a surging US dollar weighed on the currency.
“Also, the domestic liquidity remained tight as importer demand outpaced supply, while the central bank stayed on the sidelines. We see USD-INR trading between 94.10 to 95.15 with positive bias.”
According to Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, sustained FII outflows and elevated crude prices near $114 (Brent) kept pressure on the domestic currency.
“The trend remains weak, with the currency consistently facing selling pressure on rebounds, indicating a lack of strong support at higher levels. In the near term, 94.40 is likely to act as resistance, while 95.25 remains the next key support, with the rupee expected to stay volatile and driven by crude and capital flows,” Trivedi said.
Global Market Context
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was up 0.08 per cent at 98.72.
Brent crude, the global oil benchmark, was trading higher by 3.13 per cent at $114.74 per barrel in futures trade.
Meanwhile, the United Arab Emirates said on Tuesday it will leave OPEC effective May 1, in a major blow to the global oil cartel.
On the domestic equity market front, Sensex jumped 609.45 points to settle at 77,496.36, while the Nifty climbed 181.95 points to 24,177.65.
Foreign Institutional Investors offloaded equities worth Rs 2,468.42 crore on Wednesday, according to exchange data.
Meanwhile, India’s industrial production growth decelerated to a five-month low of 4.1 per cent in March on account of subdued manufacturing growth and almost flat expansion in the power sector amid the West Asia crisis, according to official data released on Tuesday.
The factory output, measured in terms of the Index of Industrial Production (IIP), expanded by 3.9 per cent in March 2025, an official statement said.
