The Indian rupee continued to sink deeper on Tuesday and reached a fresh all-time closing low of 96.58 against the US dollar amid elevated crude oil prices, global uncertainty, and a stronger dollar continue to remain key risks for the domestic unit. The rupee has depreciated for the 12th straight calendar day.
Intraday, it dropped to 96.61 against the US green back for the first time ever. On Monday, it had settled at levels of 96.36.
The rupee has depreciated 7% so far, this year. At the interbank foreign exchange market, the rupee opened at 96.37, then fell further to 96.61 against the US dollar, registering a fall of 25 paise from its open.
"The Rupee closing at a record low of 96.58 against the US dollar is a stark reflection of India's external balance sheet being aggressively repriced by unprecedented global macroeconomic shocks. This isn't a standard, routine depreciation cycle; it is a structural reaction to a highly volatile global environment," said Santosh Meena, Head of Research at Swastika Investmart.
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He added that the currency is being hit by a 'triple-whammy': the prolonged geopolitical crisis in the Middle East has kept crude oil prices dangerously elevated, the US Federal Reserve's 'higher-for-longer' stance is keeping the dollar relentlessly strong, and foreign portfolio investors (FPIs) are pulling capital out of emerging markets in search of a safe haven.
"While the Reserve Bank of India (RBI) has the formidable forex reserves to step in and smooth out extreme intraday volatility, it cannot entirely shield the local unit from macro realities like a choked Strait of Hormuz or spiraling import bills," Meena pointed out.
Going ahead, he underlined that import-heavy and unhedged corporate sectors will face severe margin pressures, whereas export-driven segments may find a narrow translation silver lining—provided global demand doesn't dry up first.
"Until crude prices cool down, the path of least resistance for the Rupee remains skewed toward further weakness," he concluded.
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