The Indian Rupee (INR) is currently under significant pressure and has reached its weakest level against the US Dollar and the Euro since mid-March 2025. This development is mainly attributed to rising crude oil prices and heightened geopolitical tensions between Israel and Iran.
Causes of the Pressure on the Indian Rupee
- Geopolitical Tensions: The increasing conflicts between Israel and Iran are leading to uncertainties in the region, negatively impacting confidence in emerging market currencies like the Indian Rupee.
- Rising Crude Oil Prices: India is heavily dependent on oil imports. An increase in crude oil prices raises import costs, strains the trade balance, and creates a higher demand for foreign exchange, which depresses the value of the Rupee against the US Dollar.
Current Exchange Rate Development
- The INR/EUR exchange rate has already declined by about -10.96% in 2025, with a yearly low of 0.01005 Euros per Rupee reached on June 16, 2025.
- There is also a tendency for depreciation against other currencies; for instance, the exchange rate of INR to Indonesian Rupiah is about ₹1 = Rp188.8 as of June 19, 2025.
Effects on Markets and the International Oil and Currency Market Situation
- The depreciation of the Indian Rupee increases costs for importers in India, particularly for energy products like crude oil.
- Higher oil prices contribute to global inflation and may prompt central banks to adopt tighter monetary policies.
- Geopolitical uncertainties increase volatility in financial markets overall.
In summary, the combination of geopolitical tensions in the Middle East and rising crude oil prices is currently putting significant pressure on the Indian Rupee. This not only has immediate effects on the Indian market through higher import costs but also influences the balance in international oil and currency markets.