New Delhi: India’s financial markets faced significant pressure on the final trading day of the week as the rupee slipped to a historic low of 94.29 against the US dollar while stock markets recorded steep losses within the first hour of trade.
The domestic currency crossed the psychologically important 94 per dollar level for the second time on Friday. It opened weaker at 94.16 compared to the previous close of 93.98. At the same time, the benchmark index BSE Sensex dropped more than 1,000 points in early trading, reflecting widespread investor anxiety.
The sharp movements in both the currency and equity markets have been largely driven by developments outside India. Escalating tensions involving Iran have disrupted crucial oil supply routes in the Middle East, causing global crude prices to surge.
For India, which imports more than 80 percent of its crude oil requirements, higher oil prices quickly translate into a larger import bill. This increases the demand for US dollars, placing downward pressure on the rupee.
At the same time, investors worldwide are moving funds into the United States Dollar, widely considered a safe haven during periods of geopolitical uncertainty. The combination of rising dollar demand for oil payments and global capital shifting toward the dollar has accelerated the rupee’s decline.
The currency has weakened by roughly 3.5 percent since the latest phase of the conflict began on February 28, highlighting the impact of global tensions on India’s financial stability.
The pressure on the rupee has also been reflected in the stock market. Foreign investors have been reducing exposure to emerging markets amid concerns over higher energy costs and global risk. A weaker rupee further reduces the attractiveness of Indian assets when measured in dollar terms, encouraging additional selling in equities.
The impact was visible almost immediately after markets opened. Within minutes of trading, investors saw nearly ₹7 lakh crore wiped off market value. The combined market capitalisation of companies listed on the BSE Sensex declined to about ₹4.24 lakh crore from approximately ₹4.31 lakh crore in the previous session.
The developments underline how geopolitical uncertainty can rapidly ripple through global markets, pushing oil prices higher, strengthening the dollar, weakening emerging market currencies, and triggering sell offs in equities simultaneously.
