Rupee closes at record low of 95.31 per USD

On Monday, the rupee posted its sharpest one‑day fall in about 1½ months, hitting a record low after U.S. proposals to end the West Asia conflict failed to win Iran’s support, pushing crude oil prices higher and worsening dollar outflows driven by foreign portfolio investors selling Indian stocks.

Furthermore, in his weekend address Prime Minister Narendra Modi urged citizens to save foreign exchange by cutting petrol and diesel use through greater reliance on public transport, postponing gold purchases for a year, and refraining from non‑essential overseas trips.

The currency ended the session at an all‑time low of ₹95.31 per US dollar, slipping 85 paise from Friday’s close of ₹94.46.

Crude oil prices

Benchmark Brent jumped roughly 4% to around $103 a barrel after the United States and Iran each dismissed the other’s peace proposal for the West Asia conflict.

Foreign portfolio investors offloaded Indian equities valued at approximately $844 million on Monday, creating demand for dollars to repatriate funds.

Amit Pabari, Managing Director of CR Forex Advisors, noted that the rupee’s steep decline stemmed from a mix of external pressures and worries about domestic sentiment.

“The main catalyst was the breakdown of US‑Iran peace negotiations, which sent Brent crude above $103 a barrel. Given India’s heavy reliance on imported oil, any rise in crude immediately spikes dollar demand and presses on the rupee,” he said.

In addition, Prime Minister Modi’s call to curb gold buying and non‑essential foreign travel to preserve foreign‑exchange reserves highlighted mounting worries about India’s external position.

Pabari added that investors view this as a sign that the trade deficit and balance‑of‑payments strains could worsen should oil prices stay high.

To bolster the rupee, he advised that the RBI and the government could adopt a combination of liquidity tools and structural steps—such as encouraging FCNR deposits, possibly introducing an NRI bond scheme, and briefly tightening outward remittance limits for non‑essential items under the Liberalised Remittance Scheme (LRS).

Urging public‑sector undertakings and large corporations to obtain foreign‑currency loans rather than purchasing dollars outright in the spot market would also help ease domestic dollar liquidity.

Pabari pointed out that a comparable move is already under discussion at the State Bank of India, where the board is evaluating the issuance of overseas bonds worth up to $2 billion.

Dollar swap window

Additionally, the RBI might launch a dedicated dollar‑swap facility for oil marketing companies (OMCs), which typically need $250‑300 million each day and often exert pressure on the spot market.

From a structural perspective, speeding up FDI clearances, loosening investment compliance rules, and simplifying the tax regime for foreign investors will be key to sustaining long‑term capital inflows, particularly as India enjoys inclusion in major global bond indices, Pabari noted.

Dilip Parmar, Senior Research Analyst at HDFC Securities, remarked that the rupee opened the week on a weak footing and ended at a record low amid heightened geopolitical turbulence.

“The chief cause of the decline was the failure of U.S.–Iran peace talks, which sent crude oil prices higher and boosted the dollar’s safe‑haven status.”

“Domestic sentiment was also dampened by Prime Minister Modi’s ‘Nation First’ austerity call, which asked citizens to cut fuel use and postpone non‑essential overseas trips to safeguard foreign‑exchange reserves,” Parmar said.

He noted that, technically, the USD/INR pair faces resistance near 95.45 and 95.80, with support now around 94.70.

Published on May 11, 2026