The Indian rupee is expected to remain under pressure and could fall to 97 per U.S. dollar if Brent crude prices exceed $130 [1].
This potential depreciation matters because India relies heavily on oil imports. A weaker currency combined with rising energy costs increases the national import bill and can fuel domestic inflation.
Anindya Banerjee, an analyst at Kotak Securities, said the currency will remain under pressure as long as the West Asia war persists. He said foreign portfolio investor (FPI) outflows and the cost of oil imports are the primary factors weighing on the rupee [1].
Banerjee said the ongoing conflict between the U.S. and Iran is a critical driver of this volatility. If Brent crude crosses the $130 threshold [1], the rupee could potentially hit the 97 mark against the dollar [1].
"FPI outflows and the oil import bill are weighing on Rupee," Banerjee said. The combination of capital leaving the market and the increased cost of energy creates a dual pressure point for the Indian economy.
Market analysts continue to monitor the geopolitical situation in West Asia to determine the trajectory of crude prices. Because the rupee's value is closely tied to these external shocks, the stability of the currency depends largely on the resolution of the conflict and the stabilization of global energy markets [1].
“Rupee will remain under pressure as long as the #WestAsiaWar persists”
The projection highlights the vulnerability of the Indian economy to geopolitical instability. Because India imports a vast majority of its crude oil, a spike in Brent prices creates a 'double whammy' effect: the cost of the commodity rises while the currency used to buy it weakens, compounding the economic strain on the current account deficit.
