Mumbai: The Indian rupee slumped to an all-time low on Monday, breaching the 93.9 mark against the US dollar and inching closer to 94, as surging crude oil prices and escalating tensions in the Middle East triggered a broad sell-off in domestic assets and spooked investors.

The sharp fall comes amid a steep rally in global oil prices, driven by fears of supply disruptions as the conflict intensifies in the region, a key hub for global energy flows. For India, which imports approx 90% of its crude requirements, the spike has significantly worsened dollar demand, putting immediate pressure on the currency.

The rupee has now weakened steadily over the past few weeks, losing ground as foreign investors pull money out of Indian equities and shift to safer assets like the US dollar. Market participants said risk aversion has deepened across emerging markets, with India seeing notable capital outflows alongside a drop in benchmark stock indices.

Traders indicated that the Reserve Bank of India stepped in intermittently to sell dollars and prevent a sharper slide, helping the rupee hold just below the psychological 94 level. However, the intervention has done little to reverse sentiment, with forex reserves dipping in recent weeks as the central bank seeks to smooth volatility.

The currency’s decline has also fed into broader market stress, with equities falling and bond yields hardening, reflecting tightening liquidity and rising uncertainty over inflation and external balances.

Analysts warned that unless crude prices ease or geopolitical tensions de-escalate, pressure on the rupee is likely to persist. With oil-driven inflation risks mounting and global investors remaining cautious, the currency could remain volatile in the near term, with the 94-per-dollar level now firmly in sight.

BI Bureau