New Delhi: The Indian rupee plunged below the psychologically significant 96-per-dollar mark for the first time in history on Friday, deepening concerns over inflation, rising import costs, and the broader impact of escalating geopolitical tensions in West Asia. During the trading session, the rupee touched an all-time low of 96.07 against the US dollar, making it the worst-performing currency in Asia so far in 2026.
The sharp depreciation reflects mounting pressure on the Indian economy as global crude oil prices surge and investors increasingly move toward the US dollar, considered a safer asset during periods of uncertainty. The rupee has remained under sustained pressure since the beginning of the year and had already crossed the 90-per-dollar mark for the first time in December 2025.
Market analysts attribute the latest decline primarily to the intensifying conflict involving the United States, Israel, and Iran. Fears of disruption along the strategically crucial Strait of Hormuz, a major global oil shipping route, have rattled financial markets and pushed energy prices sharply higher. The ongoing geopolitical uncertainty has strengthened demand for the dollar while weakening emerging market currencies, including the rupee.
India, which imports more than 85 percent of its crude oil requirements, is particularly vulnerable to rising oil prices. Brent crude has surged beyond $107 per barrel in the international market, significantly increasing India’s import bill. As oil purchases are largely made in dollars, the country’s demand for the US currency has risen sharply, placing additional pressure on the rupee.
Another factor contributing to the rupee’s decline is the strengthening of the Dollar Index, which measures the value of the dollar against six major global currencies. The index climbed to 99.05, reflecting renewed investor confidence in the US currency amid global uncertainty. A stronger dollar typically leads to weakness in Asian and emerging market currencies.
Foreign Institutional Investors (FIIs) have also continued pulling money out of Indian equity markets. On Wednesday alone, FIIs reportedly sold shares worth more than ₹4,700 crore. Such large-scale capital outflows reduce the availability of dollars in domestic markets and further weaken the rupee.
Economists warn that the rupee’s fall could intensify inflationary pressures in India. Rising fuel prices are expected to increase transportation and manufacturing costs, potentially making essential goods and services more expensive. Imported products such as electronics, mobile phones, laptops, and industrial components may also witness price hikes due to the higher cost of dollar-denominated imports.
The weakening rupee is also expected to impact Indian students and travellers heading abroad, as purchasing dollars for education, tourism, and overseas expenses will now require significantly more rupees.
Experts caution that if geopolitical tensions continue and crude oil prices remain elevated, the rupee could weaken further in the coming months, with some market observers even warning of a possible slide toward the 100-per-dollar level.
