TNI Bureau: The Indian Rupee has slipped to a historic low, crossing the ₹94 mark against the US dollar, signalling mounting pressure on the country’s external sector amid a turbulent global environment. The sharp depreciation reflects a mix of rising crude oil prices, persistent dollar strength, and continued outflow of foreign investments.

One of the key reasons behind the rupee’s fall is the surge in global crude oil prices, which have hovered around $100 per barrel in recent weeks. For a country like India that imports over 85% of its crude oil requirement, higher prices significantly increase the demand for dollars. This widens the trade deficit and weakens the domestic currency.

At the same time, global investors have been shifting their funds towards safer and higher-yielding assets in the United States. With US bond yields staying elevated above 4%, the dollar has strengthened globally, putting additional pressure on emerging market currencies, including the rupee. Foreign institutional investors have also pulled out sizeable investments from Indian equity markets, further adding to the demand for dollars.

Despite intermittent intervention by the Reserve Bank of India to stabilise the currency, the rupee has continued its downward trajectory. The central bank has been selling dollars from its reserves to curb excessive volatility, but sustained external pressures have limited its ability to reverse the trend.

The weakening rupee has broader economic implications. It raises the cost of imports, especially fuel, fertilisers, and electronic goods, which could feed into domestic inflation.

Sectors such as aviation, logistics, and manufacturing are likely to face higher input costs. However, a depreciating rupee may provide some relief to exporters by making Indian goods more competitive in global markets.

Overall, the rupee’s breach of the ₹94 level underscores the vulnerability of the Indian economy to global shocks. Much will depend on how international crude prices move, the trajectory of US monetary policy, and the stability of capital flows in the coming months. Until then, the currency is expected to remain under pressure, with volatility likely to persist.