The rupee has extended its slump as oil prices surge, dragging down currencies across oil-importing economies. Brent crude has jumped nearly 50% since the Iran war began, raising import costs and worsening outflow pressure. The Philippine peso and Indonesia’s rupiah are also under strain, with the rupiah hitting a record low, as traders watch for central bank action.
India’s rupee has slipped to a record low as surging energy import costs strain the balance of payments. That pressure is sharpening calls for Reserve Bank of India action just as it may prefer to pause. With capital outflows accelerating amid an energy-driven crisis, markets are watching whether the RBI will be forced to raise rates to defend the currency.
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Finance Minister Nirmala Sitharaman promised support for farmers hit by rising input costs, while urging India Inc to expand capacity and share what it needs to invest more. She acknowledged concerns around capital outflows and reiterated India’s readiness for reforms. She also flagged ongoing engagement with the US and Anthropic on AI model risks, and said the strategic sale of IDBI Bank will proceed.
In its latest RBI Bulletin, the central bank said India’s financial system and external sector remain resilient despite global volatility and capital outflows. It reported that key external vulnerability indicators stayed contained, while foreign exchange reserves continued to look comfortable, even as global uncertainty remained elevated.
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