Why rupee is falling in April 2026, more volatility ahead?

Rupee in a downtrend: The Indian rupee is on a weak wicket in April due to FII outflows and persistently high crude oil prices. An increase in FII outflows leads to a fall in rupee since the mass selling raises demand for dollars to repatriate funds. A rise in oil prices leads to weakening of the domestic currency since India imports 80% of its crude oil, paying in US dollars. High oil prices lead to an increase in demand of dollars by Indian importers, weakening the rupee. 

The rupee fell to an all-time low of 95.21 to the dollar on March 30, 2026, logging its worst annual fall in 14 years. In the current session, the domestic currency inched to the record low, slipping t0 94.80 level in opening deals. 

FIIs have sold over Rs 62,000 crore worth equities in cash in April, spiking volatility in the domestic equity market. 

On the other hand, crude oil prices have broadly remained above the $100 per barrel mark this month as tensions between US and Iran and the closure of Strait of Hormuz. Crude oil prices are expected to remain on the boil in the future as US President Donald Trump has instructed his aides to prepare for an extended blockade of Iran, aimed at crippling the country’s economy and forcing concessions on its nuclear programme, The Wall Street Journal reported on Tuesday (April 28).

The uncertainty around the US-Iran ceasefire has also led to elevated oil prices amid ongoing Middle East tensions. Due to these tensions, rising dollar demand from importers and widening of India’s trade deficit, are keeping the rupee under stress. 

"Uncertainty around US–Iran ceasefire developments continues to keep sentiment fragile, with markets reacting to every update on escalation or de-escalation. In the near term, 94.00 is likely to act as resistance, while 95.00 remains the next key support, with the rupee expected to stay volatile and driven by crude and global risk cues," said Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities. 

On the stock market front, Sensex rose 660 points to 77,547, while Nifty gained 200 points to 24,196 in the current trading session.