Why the Indian Rupee Is Depreciating Amid the Iran-US War

The Indian Rupee has been weakening against the US dollar as tensions between Iran and the United States escalate. The conflict has created uncertainty in global markets and pushed crude oil prices higher, which directly impacts India’s economy. One of the main reasons is the surge in crude oil prices. India imports nearly 85% of its oil requirement, so higher oil prices increase the country’s import bill. As oil companies need more dollars to buy crude, demand for the US dollar rises, putting pressure on the rupee. At the same time, global investors tend to move their money to safer assets during geopolitical tensions. The US Dollar is considered a safe-haven currency, so many investors shift funds from emerging markets like India to the US. This leads to foreign investors selling Indian assets and converting rupees into dollars, further weakening the currency. Additionally, the uncertainty has increased risk aversion in global markets, causing volatility in equities and capital outflows from emerging economies. Overall, rising oil prices, stronger demand for the US dollar, and foreign fund outflows are the key reasons why the Indian rupee is depreciating during the Iran-US conflict.