The rupee weakened to a fresh record low of 95.96 before recovering to close 2 paise higher at 95.64 against the US dollar on Thursday, resisting pressure from a firm American currency and inflation concerns amid elevated energy prices.
Forex traders said the West Asia crisis and the blockade of the Strait of Hormuz had disrupted India’s crude petroleum imports, while the sharp rise in crude oil prices had made fuel imports significantly costlier.
Traders noted that the rupee has emerged as Asia’s worst-performing currency this year, declining more than 6 per cent so far in 2026, as elevated crude prices, a strong dollar and concerns over the West Asia conflict weighed on investor sentiment.
At the interbank foreign exchange market, the rupee opened lower at 95.74 against the US dollar.
In highly volatile trade, the USD/INR pair touched an intraday high of 95.61 and a record low of 95.96 before settling at 95.64, up 2 paise from the previous close.
On Wednesday, the rupee had slipped to an intraday low of 95.80 and ended at 95.66 against the greenback.
Jateen Trivedi, Vice President and Research Analyst (Commodity and Currency) at LKP Securities, said the rupee initially weakened but later recovered sharply following reports of a proposal to reduce taxes for foreign investors to support capital inflows and stabilise the currency.
"If concrete policy steps are implemented to bring back foreign investor participation, the rupee may find stronger support despite ongoing pressure from elevated import bills and global uncertainty," Trivedi said.
He added that the rupee is expected to trade in the 95.25–96.00 range in the near term.
According to Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, tensions between the US and Iran, along with foreign fund outflows, may continue to pressure the rupee.
However, intervention by the RBI and a hike in import duties on gold and silver could support the domestic currency at lower levels, he said.
"USD/INR spot price is expected to trade in a range of 95.50 to 96.10," Choudhary added.
Meanwhile, the dollar index, which measures the greenback against a basket of six major currencies, was trading marginally lower by 0.01 per cent at 98.51.
Brent crude, the global oil benchmark, rose 0.50 per cent to USD 106.16 per barrel in futures trade.
In the domestic equity market, the Sensex jumped 789.74 points to settle at 75,398.72, while the Nifty advanced 277 points to close at 23,689.60.
Foreign Institutional Investors (FIIs) turned net buyers on Thursday, purchasing equities worth Rs 187.46 crore, according to exchange data.
On the macroeconomic front, wholesale price inflation surged to a 42-month high of 8.3 per cent in April, driven by a spike in energy prices following disruptions caused by the West Asia conflict.
Wholesale Price Index (WPI)-based inflation stood at 3.88 per cent in March and 0.85 per cent in April last year.
"Positive rate of inflation in April 2026 is primarily due to an increase in prices of mineral oils, crude petroleum and natural gas, basic metals, other manufacturing products and non-food articles," the Commerce and Industry Ministry said in a statement.
(With inputs from PTI)
