Due to the long-running geopolitical tension in the Middle East, global prices of crude oil have increased, due to which the pressure on the Indian rupee is clearly visible. On Thursday, the rupee had fallen to a record low of 96.96 against the dollar. However, later after the intervention of RBI and slight softening of oil prices, there was a slight recovery in it and it closed at 96.36. Even on Friday the rupee remained stable around 96.
Amidst these fluctuations, global investors are now assuming that the rupee may soon touch the level of Rs 100 per dollar. On this, 16th Finance Commission Chairman Arvind Panagariya has told RBI that it should not try to forcibly save the rupee by spending foreign exchange reserves, but should let it fall as per the market.
Is the fear of Rs 100 per dollar just mental?
There is a mental fear in the market regarding the rupee reaching 100 per dollar. But Panagariya says 100 is just a number, like 99 or 101. According to him, when the pressure is increasing due to global reasons like oil, then attempts to artificially control the rupee cannot be successful in the long run and due to this the country’s foreign exchange reserves can decrease rapidly.
Same signals are being seen in the market also. The rupee is already trading around 100 per dollar in the forward market. That means investors feel that the question is not if but when.
Concerns of foreign investors
If the RBI intervenes too much to save the rupee, foreign investors may see it as a signal of panic. This may increase the risk of investment in India and foreign money may go out.
According to Anders Fargeman, portfolio manager of MetLife Investment Management, if the rupee goes closer to Rs 100, investors will demand higher returns. That means investing in India can be expensive.
Situation not like 2013
Experts say that the current situation is not like 2013. At that time, inflation in India was very high, current account deficit was large and the economy was considered weak. But now the situation is quite strong.
Although the rupee has weakened by more than 7% so far this year, retail inflation still remains around 3.5%. It may increase slightly due to oil prices, but it is still within the RBI target range of 2% to 6%.
Panagariya believes that the Indian economy is now strong enough to handle some weakness in the rupee and the resulting inflation.
RBI is not in favor of increasing interest rates
According to sources, the opinion is also being formed within RBI that increasing interest rates just to save the rupee would not be the right step. This will make loans expensive and affect economic growth.
India’s economic growth rate is already showing signs of slowing down. In such a situation, increasing the interest rate just to save one mental level i.e. Rs 100 per dollar can cause further damage to the economy.
Foreign funds are continuously withdrawing money
Amid the Middle East crisis, foreign investors have withdrawn a record $23 billion from the Indian stock market in 2026. At the same time, only $1.3 billion has been invested in the Indian bond market.
Global investors believe that high oil prices may persist for a long time, which is negative for India. Therefore, they are cautious about the rupee at the moment.
Benefit possible from rupee weakness
Experts say that if the oil crisis subsides in a few months or a year, then the weak rupee can also become a profitable deal for India. This will reduce imports and make Indian exports more competitive. Also, foreign investors will start finding Indian markets cheap, due to which big investments can come back later.
Some global institutions believe that after the fall in Asian currencies, there is still a possibility of a sharp recovery. That is, even if the rupee crosses 100, it is not necessarily a sign of any major economic crisis.
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