Bearish Rupee Risk: INR to 100/USD if Oil Stays High; IT Benefits

Axis Bank's chief economist, Neelkanth Mishra, has warned that the Indian Rupee could fall to 100 against the US Dollar if crude oil prices remain elevated above $110/barrel. This forecast comes as the Rupee has already depreciated by 11% in FY26 and hit an all-time low of 95.1250 per dollar, largely due to the West Asia conflict.

A significant depreciation of the Rupee has broad implications for the Indian economy and markets. It exacerbates imported inflation, particularly for crude oil, which is a major import for India. This can lead to higher interest rates by the RBI to curb inflation, impacting economic growth and corporate earnings, while also making foreign investments more expensive.

Import-dependent sectors like Oil Marketing Companies (OMCs) such as IOC, BPCL, and HPCL, and aviation companies like INDIGO and SPICEJET, will face increased input costs and margin pressure. Conversely, export-oriented sectors, particularly IT services companies like TCS, INFY, and WIPRO, will see a boost in their Rupee-denominated revenues. Upstream oil companies like ONGC might see some benefit from higher crude prices.

Traders should closely monitor global crude oil price movements, particularly any escalation or de-escalation in geopolitical tensions in West Asia. The Reserve Bank of India's (RBI) intervention strategies in the forex market and its monetary policy stance will also be crucial. Watch for any government measures to stabilize the Rupee or manage oil price volatility.

• •Rupee could fall to 100/dollar if oil stays above $110/barrel, according to Neelkanth Mishra.
• •The local unit has fallen by 4.5% against the dollar since the war in West Asia began on 28 February.
• •Rupee depreciated 11% in FY26, hitting an all-time low of 95.1250 per dollar on 30 March.