INR: Weakest Asian currency under oil strain – Commerzbank

Commerzbank analysts flag INR as the region’s laggard, with USD/INR hitting record highs on higher Oil prices, wider current account concerns and capital outflows. They describe RBI’s active defence via FX intervention and position limits, and project only modest INR stabilization ahead as reserves remain ample but policy aims to lean against, not fully reverse, currency weakness.

Record USD/INR and RBI defence

"INR is the weakest currency in Asia, down 4.6% YTD. USD/INR reached an all-time high of just above 95.00 at the start of April. This was due to higher oil prices, which are viewed as exacerbating the current account deficit, and net capital outflows on the geopolitical uncertainties."

"RBI has intervened directly along with measures to mitigate INR’s weakness, including capping banks’ net open rupee positions at USD100mn per day to prevent large speculative bets against the currency and restricted arbitrage opportunities on offshore linked FX products."

"We expect RBI to take a pragmatic approach and lean against INR’s weakness rather than offset it altogether. India’s FX reserves fell by over 5% in March 2026 to USD688bn as RBI sold USD to support the currency. It has since recovered to USD703bn as of 17 April, which is still at a healthy level of around 10.9 months of import cover."