Mumbai, May 11, 2026, 13:45 IST
- The rupee weakened past 95 per dollar on Monday as crude prices jumped and traders pointed to likely dollar sales by state-run banks.
- The move matters because India buys much of its oil from overseas, and higher crude prices can widen the current account deficit — the gap between foreign payments and earnings.
- Prime Minister Narendra Modi’s weekend call to save fuel, curb gold buying and avoid non-essential foreign travel added to market caution.
The Indian rupee fell past 95 to the dollar on Monday, hit by a jump in oil prices after U.S.-Iran peace efforts stalled, while traders said state-run banks likely sold dollars to slow the currency’s decline. Reuters reported the rupee at 95.1850 per dollar, down 0.75%, while Navbharat Times and Moneycontrol cited a move to 95.17.
The pressure landed at a bad moment for India. Costlier oil raises demand for dollars from importers, hits the rupee, and can feed inflation at home if fuel costs are passed through. It also threatens the current account, a measure watched closely by investors in oil-importing economies.
In the interbank foreign-exchange market, where banks trade currencies with each other, the rupee opened at 94.97 against the dollar and later moved to 94.90 in early trade, ThePrint reported, citing PTI. The report said the currency had closed at 93.51 on Friday.
Oil was the immediate trigger. Brent crude futures rose about 4% to more than $105 a barrel after U.S. President Donald Trump called Iran’s response to a U.S. peace proposal “unacceptable,” raising fresh fears over supply through the Strait of Hormuz. U.S. West Texas Intermediate crude was close to $100 a barrel. Investing
Modi on Sunday urged Indians to conserve fuel, return where possible to work-from-home practices, use public transport and carpooling, reduce gold purchases and limit non-essential foreign travel to save foreign exchange. “In the current situation, we must place great emphasis on saving foreign exchange,” Reuters quoted him as saying. Reuters
The appeal was unusually direct. At a public meeting in Hyderabad, Modi also asked citizens to use metro systems, electric vehicles and rail freight where possible, and urged a one-year pause on non-essential overseas trips and gold buying, Indian Express reported.
Indian stocks also sold off. Reuters said the Nifty 50 fell 1.16% to 23,894.60 and the BSE Sensex dropped 1.28% to 76,331.84 in morning trade, with all 16 major sectors lower. Oil marketing companies Indian Oil, BPCL and HPCL fell about 2.6%, while IndiGo, hotel stocks and jewellers also lost ground.
VK Vijayakumar, chief investment strategist at Geojit Investments, called Modi’s appeal a “crisis management response” to the current account problem caused by high crude prices. He said sectors tied to fuel, travel, hotels and gold were being hit in sentiment. Reuters
The rupee’s weakness was not isolated, but India looked more exposed than some peers because of its oil bill. Reuters said Asian currencies were down 0.3% to 1% on the day, while MUFG analysts warned that energy disruptions could be harder for India and several ASEAN markets with lower crude inventory buffers.
Oil traders were still watching geopolitics rather than inventories alone. Priyanka Sachdeva, senior market analyst at Phillip Nova, said crude was trading like a “geopolitical headline machine,” while IG market analyst Tony Sycamore said attention was shifting to Trump’s China visit this week and whether Beijing could help push Iran toward a deal. Investing
The main risk is that intervention by the Reserve Bank of India can slow a fall, not remove the shock if oil stays high. A quick diplomatic opening could ease crude and help the rupee recover, but a longer disruption near Hormuz would keep importers buying dollars and could force harder choices on fuel prices, reserves and growth.
Since the Iran conflict began in late February, Reuters said the rupee has fallen more than 4%, the Nifty 50 has dropped 5% and India’s 10-year sovereign bond yield has risen nearly 40 basis points. A basis point is one-hundredth of a percentage point.
