Oil Shock and War Fallout: Why Congress Is Misleading Indians on the Rupee
The rupee’s slide during the Iran war has given Congress and Rahul Gandhi an easy political line: blame the government, blame Modi, blame policy, and pretend the rest of the world is sitting comfortably while only India is sinking. That line works well in a speech. It works far less well when one bothers to look at the numbers. The rupee touched 95.21 against the dollar on March 30 before ending around 94.83, and that is serious. But the larger fact is that this has happened in the middle of a global oil shock, a broad dollar surge, and a wider selloff in risk assets across emerging markets and even major developed economies. Reuters reported that the rupee has fallen 11% in the 2025-26 fiscal year, its worst annual performance in more than a decade, while Brent crude climbed to around $115 a barrel and foreign investors sold more than $19 billion worth of Indian equities.
The starting point of any honest discussion is oil. India imports roughly 85% to 90% of its crude requirement. That means a jump of $20 or $30 a barrel is not some abstract market event for India. It immediately means a higher import bill, higher dollar demand, more pressure on inflation, and more stress on the current account. Since the Iran war began on February 28, Reuters reported that the rupee has already dropped 4.2% in that conflict window alone, while foreign investors pulled a record $12.14 billion from Indian equities and another 152 billion rupees from Indian bonds under the Fully Accessible Route. That is not the profile of a currency collapsing because of one domestic press conference. That is the profile of an oil-importing economy being hit by a global external shock.
Now look beyond India, because this is the part the opposition conveniently deletes from its story. Reuters reported on March 31 that the US dollar is headed for its biggest monthly rise since July, with the euro and the British pound each down more than 2% for the month, while Asian currencies have been hit even harder in several cases. Japan’s yen has weakened to near 160 per dollar, a level serious enough for Tokyo to openly threaten intervention. South Africa’s rand is on track for a roughly 7% monthly drop against the dollar. Reuters also reported that the Indian rupee, Indonesian rupiah and Philippine peso all fell to record lows as the dollar surged on war-related safe-haven demand. In other words, the rupee is not the only casualty here. It is part of a much larger currency adjustment that has followed the oil shock and the dash into dollars.
That is where the Congress narrative starts to look less like economics and more like performance. If the yen is near 160, if the euro and pound are both down more than 2% in a month, if the rand is off about 7%, and if Asian currencies from India to Indonesia are hitting record lows, then the claim that the rupee’s weakness proves some uniquely Indian policy disaster simply does not hold. It may still be politically useful, of course. Why let global facts ruin a good slogan? But a global dollar surge is a global dollar surge. It does not stop at the Congress office and politely ask whether Rahul Gandhi would prefer a better headline.
This does not mean the government deserves a free pass. A serious article should not replace opposition spin with government spin. India could have done more, earlier, to reduce its vulnerability. Rupee trade arrangements remain limited compared with the scale of India’s import bill. Strategic petroleum reserves are useful, but not large enough to fully cushion a prolonged disruption. Export competitiveness has improved somewhat because of the weaker currency, but that is not enough to offset the speed of the oil-driven import shock. These are real questions. But they are not the same thing as pretending the rupee is behaving in some bizarre, India-only way. Reuters noted that the RBI has intervened and that authorities have revived parts of the old playbook, including fuel duty relief and tighter foreign-exchange measures, even as forex reserves now cover about 9.2 months of imports. That may not be perfect management, but it is not inaction either.
The other number Congress should explain before sermonising is the foreign money exit. Reuters reported record foreign investor sales from Indian assets after the war broke out. Once that money leaves, the demand for dollars rises and the rupee comes under more pressure. That process is mechanical. It is not ideological. It does not care whether one is pro-government or anti-government. It is how open markets behave under external stress. The same Reuters reporting also pointed out that India’s Nifty 50 dropped 11% in March, the sharpest monthly fall since March 2020, while bond yields crossed 7%. That tells you the market shock is broader than just one exchange rate. The rupee is part of a chain reaction: war, oil, inflation fears, capital outflows, stronger dollar, weaker emerging market currencies. Remove four links in that chain and you can produce a neat opposition talking point. Keep all five, and the politics starts looking shallow.
What makes this kind of opposition attack especially cynical is that it exploits the public’s lack of daily exposure to currency markets. Most people do not track the yen, the rand, the euro, or the dollar index every morning. They see petrol prices, they hear that the rupee is weaker, and they assume somebody in Delhi must have blundered. That is precisely why responsible politics should explain the full picture rather than distort it. Instead, Congress has chosen the familiar route of stripping away global context and presenting a worldwide crisis as a local morality tale. It is easier to say the government failed than to explain why oil at $115 and a surging dollar would hurt nearly every oil-importing economy on the planet. Easy politics, yes. Honest economics, no.
The truth is simpler and less theatrical. India is under pressure because the world is under pressure. The rupee has weakened because the dollar has strengthened, oil has spiked, and foreign capital has fled risk assets. India is not the best performer in this environment, but it is certainly not the outlier that Congress wants voters to imagine. The yen has been pushed to the edge of intervention territory. The rand is posting a steep monthly decline. The euro and pound are losing ground. Other Asian currencies are scraping record lows. That is the global canvas. The rupee’s fall has to be judged on that canvas, not on a party podium.
Congress is free to criticise the government for not building deeper buffers, faster rupee settlement systems, bigger reserves, or stronger export resilience. Those would be legitimate arguments. But to sell a global currency storm as proof of one government’s singular failure is not scrutiny. It is opportunism dressed up as concern. In the middle of an oil war, voters deserve more than that. They deserve facts, comparisons, and some minimum respect for arithmetic.
