The Indian rupee fell to a record low of 95.55 against the US dollar on Tuesday as rising crude oil prices and global tensions continued to pressure financial markets.
The sharp fall came amid uncertainty over the fragile US-Iran ceasefire and fears of supply disruptions in global oil markets. Since India imports a major portion of its crude oil needs, higher oil prices usually increase pressure on the rupee and the overall economy.
Currency traders said strong demand for the US dollar and continued foreign investor selling in Indian markets also weakened the rupee. Foreign institutional investors have been pulling money out of equities due to global risk concerns, adding further pressure on the domestic currency.
The weakening rupee has raised concerns about higher import costs, especially for fuel and essential goods. Analysts warned that if crude oil prices continue to rise, inflationary pressure could increase in the coming months.
The Reserve Bank of India is believed to have intervened in the forex market to prevent a sharper fall in the currency. However, market experts expect the rupee to remain volatile as long as global tensions and oil prices stay elevated.
The falling rupee also affected stock markets, with benchmark indices trading lower during the session. Investors remained cautious amid fears of rising inflation and slowing global growth.