The rupee on Tuesday breached the psychologically crucial 96 mark to the US dollar, giving up almost all the gains it made after the government and the Reserve Bank of India made a series of announcements to attract foreign capital in early June.
The Indian currency’s fall came as US President Donald Trump intensified military operations against Iran, triggering a sharp rise in global crude oil prices and adding pressure on oil-importing economies such as India. Higher crude prices typically increase India’s import bill and drive up demand for dollars, putting downward pressure on the rupee.
The Indian currency, which opened weaker at 95.94, tumbled 58 paise to close at 96.20 per USD against the previous close of 95.62. In intraday trades, it tested an intraday low of 96.24 per USD.
The rupee last breached the 96 per USD mark in May. On May 20, the rupee opened around 96.86, touched an all-time intraday low of 96.96, and closed at a record low of 96.82. This remains the weakest closing level on record.
V Rama Chandra Reddy, Head – Treasury, Karur Vysya Bank, said: “The primary driver for the rupee’s weakness is the escalation in the West Asia conflict. This sharply lifted crude oil prices and weakened sentiment across emerging market currencies.
“Market sentiment currently outweighs the positive impact of inflows on account of FNCR(B) deposits and investment by FPIs under the fully accessible route.”
He said that crude oil had declined to around $70 a barrel in early July but has since rebounded to around $85-86 a barrel as geopolitical tensions have intensified. The spike in crude prices has amplified concerns over India’s current account deficit and increased dollar demand from oil importers, both of which have weighed on the Rupee. Rising oil prices are negative for India because they increase the country’s import bill and demand for dollars.
A day before the June 5 monetary policy review, the rupee had closed at 95.78 per USD. On the policy review policy day, it appreciated sharply to close at 94.94, notching up a huge gain of around 84 paise in a single session.
The appreciation trend continued over the following weeks, with the Rupee strengthening to around 94.39 on June 25, its strongest closing level after the policy review. However, the rally gradually reversed as crude oil prices climbed amid escalating geopolitical tensions, eroding the benefits of capital inflows and exerting fresh pressure on the domestic currency. Since then, the Rupee has steadily weakened.
G-Secs feel the heat
Separately, the government securities market too felt the heat of rising crude oil prices, a pick-up in retail inflation and hardening US Treasury yields.
Yield of the 10-year benchmark G-Sec (6.94 per cent GS 2036) rose about 6 basis points to close at 6.7945 per cent against previous close of 6.73 per cent. Price of this security was down 40 paise. Yield and price of a bond are inversely correlated and move in opposite directions.
Published on July 14, 2026
