The rupee fell to a record low as crude prices rose following a flare-up in violence in West Asia, leading analysts to consider whether the central bank may return to its 2013 playbook to support the currency.
The rupee weakened as much as 0.4 per cent to 95.41 per dollar on Tuesday, breaching its April 30 low of 95.33. The currency trimmed losses to close at 95.18. Brent traded near $113 a barrel after surging 5.8 per cent on Monday as traders tracked tensions in West Asia after fresh clashes between the US and Iran.
The currency has come back under pressure as the Reserve Bank of India’s recent crackdown on speculative bets delivered only brief relief.
The West Asia conflict has kept energy prices elevated, while foreign investors have pulled $21 billion from local equities this year — surpassing 2025’s full-year outflow. Those trends are straining the country’s external finances.
“The underlying issue for INR remains the balance of payments,” UBS Group AG economists including Tanvee Gupta Jain wrote in a note.
“Measures to increase capital flows need to be the key policy priority.” The Swiss bank lowered its fiscal 2027-end rupee forecast to 96 per dollar from 94.
To address these pressures, the RBI has scope to deploy its 2013 policy toolkit — drawing on measures used when the taper tantrum hit — to support the rupee, analysts said. Those steps included raising dollars from expatriate Indians, curbing gold imports and opening a special forex swap window for oil-marketing firms, who account for $250 million to $300 million in daily demand.
At the time, the authority supplied about $12 billion to refiners as the rupee slid past 60 per dollar — then a record low.