The Indian rupee has slipped to a historic low of 96.14 against the US dollar, raising significant concerns over fuel prices, inflation, and the cost of everyday essentials. According to ET Now, experts link this decline to rising crude oil prices, geopolitical tensions in West Asia, and sustained foreign investor outflows, all of which are adding pressure on the economy and household budgets. This latest depreciation comes after the currency had already closed at a record low of 95.81 on Friday, highlighting the critical vulnerability where even modest further weakening could fully offset recent fuel price relief measures.
The government implemented a ₹3 per litre increase in petrol and diesel prices on Friday, as reported by SBI Research's Ecowrap. This hike was introduced primarily to ease the financial strain on Oil Marketing Companies (OMCs), which continue to suffer from high crude oil costs while retail fuel prices have remained unchanged. According to the report, the recent price revision was designed to address the mounting losses faced by these companies due to unchanged retail prices.
The financial strain on OMCs has reached critical levels, with these companies incurring losses of ₹1,000 crore per day, which amounts to approximately ₹3.6 lakh crore annually, as reported by SBI Research. The report highlighted that OMCs' under recoveries on sales of petrol and diesel are soaring due to unchanged retail prices. The ₹3 per litre revision in fuel prices would provide relief worth about ₹52,700 crore to OMCs, but this would cover only around 15% of their projected FY27 losses. Before this price adjustment, freeze-locked retail prices amid surging Brent crude left fuel retailers losing an estimated ₹1,000 crore per day.
The rupee's sharp depreciation has emerged as the primary threat to OMCs' profitability from the recent fuel price hike. The currency's slide below 96.14 against the US dollar highlights a critical vulnerability where even a modest ₹2 further weakening from its projected FY27 average of ₹94 could fully offset the gains from the fuel price increase. According to SBI Research, the rupee's consistent decline, down 12.02% over the past year, has pushed it to an all-time high of 99.82 in March 2026. Forward-looking projections suggest continued weakness, with potential trading between ₹91 and ₹95 in coming months, while some analysts project it could appreciate towards ₹86 by end-2026 under normalized conditions.
Major OMCs continue to face significant operational challenges despite the recent price hike. Indian Oil Corporation (IOCL) reported a ₹15 billion loss in 2018-19 due to currency volatility, while Hindustan Petroleum Corporation Limited (HPCL) recorded a substantial foreign currency transaction and translation loss of ₹2,492 crore in FY26. Oil Minister Hardeep Singh Puri confirmed that OMCs are currently incurring losses of around ₹1,000 crore per day, translating to approximately ₹3.6 lakh crore annually. The fuel price revision may push Consumer Price Index (CPI) inflation higher by around 15–20 basis points during May–June 2026, as reported by SBI Research, with the bank revising its FY27 inflation projection to 4.7%. The sector's performance remains intrinsically linked to rupee trajectory, with analysts maintaining 'Buy' ratings for IOCL citing strong fundamentals but warning of currency-driven operational risks.
