India scrambles to steady rupee as oil shock bites
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- India is scrambling to salvage a sinking rupee as surging oil prices linked to the Middle East conflict threaten to disrupt the world’s fastest-growing major economy.
- India’s central bank has already poured billions of dollars to stabilise the currency, curbed speculative trading and offered a special credit line to oil importers to ease dollar demand.
- Indian Prime Minister Narendra Modi has also urged voluntary austerity measures to rein in dollar-guzzling imports, including cutting down on gold buying and foreign travel for a year.
India is facing a significant economic challenge as the rupee has plummeted to a record low of over 96 to the dollar, primarily due to surging oil prices linked to the ongoing conflict in the Middle East. This decline, which has exceeded 5 percent since the crisis began in February 2026, has made the rupee the worst-performing major currency in Asia this year.
In response to this alarming trend, the Indian government is taking urgent measures to stabilize the currency. The Reserve Bank of India has already intervened by injecting billions of dollars into the market and implementing restrictions on speculative trading.
Additionally, the central bank has introduced a special credit line for oil importers to alleviate the pressure on dollar demand. Prime Minister Narendra Modi has called for voluntary austerity measures, urging citizens to cut back on gold purchases and foreign travel to help curb imports.
The economic outlook remains precarious, with projections indicating that the current account deficit could exceed 2 percent of GDP this fiscal year, more than double the previous year's figure. As India grapples with these challenges, the government's focus remains on stabilizing the rupee to protect the economy from further disruption.