The Indian rupee declined 31 paise to a record low of 92.32 against the US dollar in early trade on Thursday, driven by intense pressure from surging crude oil prices and deepening geopolitical tensions in the Middle East.
Persistent foreign capital outflows and a strengthening dollar index added to the weakness, following the previous session’s close at 92.01 (with an intra-day low of 92.18).
The Iranian government has imposed partial restrictions on the Strait of Hormuz, limiting the outflow of gas and crude oil to several countries, including India.
On Thursday, Iranian forces began laying underwater mines in the strait following repeated missile strikes and retaliatory exchanges with Israel and the United States, along with its regional bases. The ongoing closure and fighting have pushed crude oil prices sharply higher in recent weeks.
On Tuesday, prices climbed to a record $120 per barrel after several Asian countries reported severe fuel shortages.
Oil production in the UAE, Bahrain, Kuwait, Oman, and Saudi Arabia has been temporarily shut amid escalating hostilities between Iran and the United States.
LNG production in Qatar has also been reduced to just 25 per cent of normal levels after repeated drone and missile strikes from both Iran and Israel.
The situation has severely impacted India. Around 20–30 per cent of the country’s food and hospitality businesses have reported acute shortages of LNG. Over 25 per cent of restaurants, eateries, hotels, and hospitality outlets in metropolitan cities have been forced to shut temporarily due to the lack of gas.
Commercial gas cylinders are reportedly being sold at double their original prices in many areas. The government is working to stabilise prices and ensure the supply of LPG cylinders at fixed rates.
Experts warn that if the Middle East situation does not normalise quickly, more than 50 per cent of businesses in the hospitality sector could face temporary shutdowns in the coming weeks.
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