The Indian rupee continues its downward trajectory, slipping to a record low of 95.9575 against the US dollar on Thursday, before hovering near 95.94 on Friday, May 15, 2026. The currency is currently on track for a weekly decline of over 1%, making it one of the worst-performing currencies in Asia this year.
Drivers of the Rupee’s Decline
The currency’s weakness is primarily driven by the escalating conflict in West Asia and its impact on energy costs:
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High Oil Prices: Brent crude has surged above $106 per barrel. Given that India imports nearly 90% of its oil, these elevated prices have severely strained the country’s current account and increased the demand for dollars.
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Geopolitical Rhetoric: Recent statements from U.S. President Donald Trump, indicating a lack of patience with Iran, have added a “war premium” to oil prices and fueled safe-haven demand for the US dollar.
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Foreign Outflows: Persistent foreign portfolio outflows and concerns over India’s depleting foreign exchange reserves have further pressured the rupee.
RBI Intervention
To prevent a complete freefall, the Reserve Bank of India (RBI) has been actively intervening in the forex markets. Traders report that state-run banks have been consistently selling dollars on behalf of the central bank to cushion the currency’s fall and prevent it from breaching the psychological 96.00 mark.
Impact on Domestic Fuel Prices
The combination of a weak rupee and high global crude prices has forced a significant policy shift at home. For the first time in four years, state-run oil marketing companies (OMCs) hiked fuel prices on Friday:
| Fuel Type | Price Hike (per litre) | New Price in Delhi |
| Petrol | ₹3.00 | ₹97.77 |
| Diesel | ₹3.00 | ₹90.67 |
Economists warn that if the conflict in the Strait of Hormuz continues to disrupt shipping, the rupee could face further devaluation. The government’s recent decision to hike import duties on gold and silver is seen as an attempt to curb the trade deficit and support the currency, though its immediate impact has been overshadowed by global energy risks.
