Even if the macroeconomic foundations of the Indian economy are still solid, rising crude oil prices in the midst of the ongoing crisis in the Middle East have put further pressure on the rupee, Minister of State for Finance Pankaj Chaudhary told parliament on Tuesday.
Up until March 17, 2026, the Rupee (INR) had lost 7.49% of its value in relation to the US dollar (USD) in 2025–2026.
The rise in the trade imbalance has contributed to the INR’s devaluation while the capital account has provided comparatively little support. Further strain on the INR has come from rising crude oil prices in the midst of the current Middle East crisis.
Following the disagreement between the United States and Iran on February 28, crude oil prices have surpassed $100 per barrel, impeding global growth.
Strong domestic demand, lower inflation, better corporate balance sheets, and persistent fiscal restraint all contribute to economic growth. Over the past three years, real GDP has continuously increased by more than 7%. Headline consumer price inflation has considerably decreased, averaging 1.9% from April to February of 2025–2026.
A number of domestic and international variables, including changes in the Dollar Index, trends in capital flows, interest rates, changes in oil prices, the current account deficit, etc., affect the exchange rate.
