The Indian rupee is inching closer to the critical 87-per-dollar level, increasing the likelihood of intervention by the Reserve Bank of India (RBI) to stem further depreciation. Analysts from ANZ and MUFG Bank believe the RBI may act if the rupee breaches this psychological threshold.
Currently Asia’s worst-performing currency this quarter, the rupee has been under intense pressure due to surging crude oil prices. India, being the world’s third-largest crude importer, faces a mounting current account deficit and inflation risk as oil prices rise amid escalating tensions between Iran and Israel.
“The 87 level is very much on the cards if the Middle East tensions rise and the crisis becomes a regional one,” said Dhiraj Nim, currency strategist at ANZ. “That would be tantamount to a shock, and the RBI won’t like that.”
Last week, the rupee hit a three-month low before closing at 86.59 on Friday. A breach beyond 87 — last seen in February — may lead to heightened volatility, potential outflows, and pressure on the RBI’s monetary policy stance.
