Indian Rupee Hits Record Low Amid US-Iran Tensions and Soaring Oil Prices

The Indian rupee has hit a record low of 97 against the US dollar, with a 2% decline in value over the past month. The currency's weakness is attributed to rising global tensions, including the ongoing US-Iran conflict, which has pushed back risk assets and strengthened the US dollar.

Rising crude oil prices have also put pressure on the rupee, as India imports around 90% of its crude oil. When oil prices surge, India is forced to spend more dollars on imports, weakening the rupee further. The Reserve Bank of India (RBI) has intervened multiple times to support the rupee, selling billions of dollars from its foreign exchange reserves.

However, experts say RBI's efforts only reduce volatility and do not stop the fall. According to JB Drax Honore's Vivek Rajpal, 'The RBI's softer approach towards intervention has been difficult to understand.'

The rupee has shown a marginal recovery following RBI's intervention, but if global tensions continue to rise, the currency is expected to stay in the red zone. Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted that 'We expect the rupee to trade with a negative bias as on further escalation in tensions between the US and Iran.' Elevated crude oil prices may also pressure the rupee.