On Friday, the Indian Rupee fell to an all-time low, below the 94-per-dollar mark, as increasing fears of the current conflict in West Asia and its effect on the world energy reserves prevailed. The currency depreciated by 0.9 percent to close at 94.8125 against the US dollar, which was its all-time low in the intraday trade. This sharp fall underscores the mounting pressure on the rupee which is currently headed towards its sharpest fiscal-year fall in a decade.
Since the end of February when the tensions between Iran and the world started to increase, the rupee has been depreciating almost 4%. On the larger scale, it has fallen by approximately 11 percent in the present fiscal year which in India is between April and March. The most recent occasion when the rupee has suffered a similar decline was when it was in the 201112 financial year, when the combined effect of worldwide risk aversion due to the euro zone debts crisis and domestic factors, such as the growing current account deficit and a decline in foreign capital inflows, resulted in a 14 percent depreciation.
The current crisis in West Asia has brought about one of the worst energy supply drills in the past few decades. The effect of the surging crude oil prices and limited exports of the region have had far-reaching implications on industries that have resulted in effects as far as the cost of cooking gas to even the cost of household plastic.
The strain also reflected on the financial markets. The Nifty 50, the benchmark equity index of India, fell by two percent on Friday and the 10-year government bond yield increased by seven basis points to 6.94, which reflected increased investor caution and volatility.