The Indian rupee has fallen to a historic low, driven by rising crude oil prices due to escalating Middle East conflicts. Analysts are now evaluating whether the central bank will deploy measures similar to those used in 2013 to support the local currency. On Tuesday, the rupee declined by as much as 0.4% against the U.S. dollar, reaching 95.4175, breaching the previous low of 95.3337 recorded on April 30. Brent crude oil, which surged 5.8% on Monday, is currently trading near $113 per barrel as traders closely monitor rising tensions in the Middle East following renewed U.S.-Iran clashes. Recent efforts by the Reserve Bank of India to curb speculative bets provided only temporary relief, and the rupee is once again under pressure. Persistent Middle East conflicts are keeping energy prices elevated, while foreign investors have withdrawn $21 billion from Indian equity markets this year, exceeding the total outflows for all of 2025. These trends are straining the country’s external financial position. According to a report by UBS Group economists including Tanvee Gupta Jain, "The fundamental issue facing the rupee remains the balance of payments. Measures to boost capital inflows should be a key policy priority." The Swiss bank has revised its rupee forecast for the end of fiscal 2027 to 96 per U.S. dollar, down from a previous estimate of 94. Analysts suggest that to address these pressures, the Reserve Bank of India has the capacity to utilize its 2013 policy toolkit, drawing on multiple measures implemented during the "taper tantrum" period to stabilize the rupee. These measures included raising U.S. dollars from non-resident Indians, restricting gold imports, and establishing a special foreign exchange swap window for oil marketing companies, which require $250 million to $300 million daily. At that time, as the rupee fell beyond the then-historic low of 60 per dollar, the central bank provided approximately $12 billion in funding to refiners. Strategist Andre de Silva noted, "The rupee’s recent slide to a record low underscores how high oil prices are increasingly overwhelming India’s policy efforts to stabilize its external situation. Deteriorating trade dynamics, persistent foreign capital outflows, and widening balance of payments pressures have placed the rupee in a sustained depreciation trend, revealing deepening external vulnerabilities." Thus far, the Reserve Bank of India has relied on dollar sales to defend the currency. India’s foreign exchange reserves stand at approximately $700 billion, but negative forward book liabilities of around $103 billion, reflecting future dollar obligations, limit the central bank’s operational flexibility. Reserve Bank of India Governor Sanjay Malhotra stated last Friday that although the Iran conflict poses challenges for India as a major oil importer, capital inflows resulting from recently signed free trade agreements should partially offset these headwinds. Speaking at an event in Amsterdam, he indicated that India’s net capital account position is expected to improve compared to last year.