The rupee on Thursday closed at a record low of 94.91 against the US dollar, breaching the psychologically crucial 95 mark intraday for the first time since March 30. Surging crude oil prices, persistent foreign portfolio investor (FPI) outflows and importer demand weighed heavily on the currency.

However, the RBI’s aggressive intervention ensured that the Indian currency closed below the 95 level, helping it to recover most of its losses. The rupee ended down about 7 paise vis-a-vis the previous close of 94.8450.

Crude at 4-year high

The rupee depreciated sharply during the course of the day amid spike in global crude oil prices at a four-year high. Crude oil prices are being driven by continued disruptions in the Strait of Hormuz in the wake of the ongoing West Asia war. They also reacted to remarks by Donald Trump, who said the blockade would not be lifted until Iran abandons its nuclear programme. Brent crude briefly surged to around $126 per barrel before easing.

During the day, the rupee fell to an all-time low of 95.3325, breaching the previous intraday low of 95.22 touched on March 30.

Forex traders said the rupee on Thursday came under pressure on multiple fronts – hardening crude oil prices, FPIs selling to the tune of $201 million in Indian equities, and heightened fears of further depreciation prompting importers, especially oil marketing companies, to ramp up dollar purchases. These factors exacerbated demand for the greenback.

According to Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, what the forex market is witnessing is a textbook reflexive trade, with rising oil prices triggering FPI outflows, FPI outflows compounding the dollar demand from oil importers and the combination overwhelming the RBI’s defensive measures.

He noted that April alone has seen FPI outflows of $7.5 billion, taking calendar-year-to-date outflows past $20 billion, and that is sitting on top of an oil import bill that has expanded materially as Brent has moved from $72 in February to $118 today.

“The two channels — trade deficit and capital account — are pulling in the same direction and the rupee has no natural buffer. The RBI is intervening, and will continue to intervene, but the central bank’s strategy here is volatility management, not level defence.. Reserves are being deployed to slow the move, not to reverse it,” said Banerjee.

A forex dealer with a public sector bank said to ensure that the forex reserves don’t get depleted defending the rupee, the RBI will need to bring in a scheme so that banks are encouraged to mobilise dollar deposits. Further, curbs will have to be imposed on dollar outflows by temporarily reducing the liberalised remittance scheme limit.

Published on April 30, 2026