India’s rupee slips toward 100 per dollar on oil price spike

April 1, 2026 (MLN): India’s currency is facing mounting downside risks, with the rupee potentially weakening to the psychologically critical 100-per-dollar level if elevated oil prices persist amid the ongoing Iran conflict, according to Bloomberg.

The sharp rise in crude prices is likely to deepen India’s macroeconomic vulnerabilities, particularly by widening the current account deficit and stoking inflationary pressures.

As one of the world’s largest crude importers, India remains highly exposed to energy price shocks, amplifying downward pressure on the rupee.

Currency markets are increasingly pricing in further depreciation, with derivatives signaling expectations that the rupee could test or even breach the 100 mark in the near term if geopolitical tensions remain unresolved.

Experts believe that while the Reserve Bank of India (RBI) may attempt to curb volatility through policy measures, such interventions are unlikely to alter the broader trajectory driven by global macro conditions.

“The move toward 100 is no longer a distant risk it has become a realistic scenario if current trends continue,” market participants noted, adding that central bank actions may only provide temporary stability.

In response to the currency’s persistent weakness, the RBI has introduced stricter controls in the onshore forex market, including capping banks’ end of day open positions at $100m.

The measure aims to limit speculative bets against the rupee and reduce excessive volatility.

Despite these efforts, the rupee remains among the worst performing Asian currencies this year, weighed down by capital outflows and deteriorating external balances.

The surge in oil prices has further compounded the situation. Global crude benchmarks have risen sharply since late February, with analysts warning that supply disruptions particularly around key shipping routes could push prices significantly higher in the coming weeks.

A sustained rally in oil could also strain remittance inflows from the Gulf region, adding another layer of pressure on India’s external account and currency stability.

Historically, geopolitical shocks have had a pronounced impact on the rupee.

During the Russia Ukraine conflict in 2022, the currency depreciated notably over a six-month period.

However, the current crisis could have a more severe impact due to tighter oil supply conditions.

Even if tensions ease, underlying structural challenges including weaker foreign investment flows and concerns surrounding key export sectors may continue to weigh on the rupee’s outlook.

Showing growing investor caution, foreign funds withdrew approximately $12bn from Indian equities in March, marked the largest monthly outflow on record and emphasizing deteriorating sentiment toward emerging market assets.

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