Rupee hits fresh record low of 96.38 against US dollar as crude oil and Iran tensions pressure currency

The Indian rupee opened at a fresh record low of 96.38 against the US dollar on May 19, 2026, depreciating 18 paise from its previous close of 96.20, as elevated crude oil prices, strong US Treasury yields and continued geopolitical uncertainty surrounding the Iran conflict kept pressure on the domestic currency.

At the interbank foreign exchange market, the rupee opened at 96.38, extending a sharp depreciation trend that has seen the currency weaken significantly since the West Asia conflict escalated earlier this year. The rupee had earlier touched a record low of 95.74 on May 12 before sliding further amid persistent external pressures.

Why the rupee is weakening

Forex market participants said the biggest pressure point remains crude oil. Brent crude futures were trading near $109.96 per barrel, far above the pre-crisis range of $75-80 per barrel. Higher crude prices directly increase India’s import bill and widen the current account deficit, creating sustained demand for dollars.

Analysts estimate that every $1 increase in Brent crude adds nearly $1.5 billion to India’s annualised import bill at current consumption levels.

Apart from crude prices, the ongoing disruption linked to the Strait of Hormuz has also increased freight and insurance costs on Gulf trade routes. India’s exports, remittances and trade flows linked to Gulf Cooperation Council countries are facing pressure due to the elevated geopolitical risk.

CR Forex Advisors Managing Director Amit Pabari said that the rupee remains under pressure due to weak confidence and continued global uncertainty. According to him, the USDINR pair is now gradually shifting focus toward the 97 mark, as there are still no clear signs of sustained easing in global risk factors.

Dollar strength and safe haven demand

The dollar index, which tracks the greenback against a basket of six major currencies, remained near 99.10. Even though the index was marginally lower on the day, safe haven demand for the US dollar remained strong due to ongoing geopolitical tensions.

Markets are also closely tracking developments between the United States and Iran after US President Donald Trump recently paused a planned military strike on Iran following diplomatic interventions from Gulf nations.

India continues Russian crude purchases

In a development that could partially cushion India’s external sector pressure, the government reiterated that India will continue buying Russian crude oil based on commercial viability and energy security needs.

A senior petroleum ministry official stated that India had been purchasing Russian crude before, during and after sanctions waivers. Discounted Russian oil continues to provide cost relief to Indian oil marketing companies, with estimates suggesting discounts of around $15-20 per barrel compared to international benchmarks.

Equity markets rise despite rupee weakness

Interestingly, the rupee’s record low came even as Indian equity markets traded higher. The Sensex rose over 366 points in early trade while the Nifty crossed 23,760, supported by optimism around a possible diplomatic resolution in the Iran conflict.

Foreign Institutional Investors also remained net buyers for the third straight session, purchasing equities worth Rs 2,813.69 crore on Monday.

The divergence between equities and the rupee reflects two separate market views. Equity markets are reacting positively to hopes of geopolitical de-escalation, while currency markets remain focused on India’s external sector vulnerabilities and elevated crude oil prices.

Overall, the rupee remains under pressure as traders continue to monitor crude oil movements, US-Iran developments, foreign fund flows and global dollar strength.

Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions.