Editorial

The Indian rupee has slipped past ₹92 to the US dollar — its weakest level ever — as global financial markets reel from a sharp escalation of conflict in the Middle East. Persistent geopolitical tensions, especially involving the United States, Israel and Iran, have driven up crude oil prices to multi-year highs, prompting renewed investor risk aversion and a surge in demand for safer assets such as the US dollar.

This milestone isn’t just technical: it embodies deepening economic stress points. India imports more than 80% of its crude oil, meaning higher oil prices directly inflate the cost of foreign exchange outflows and widen the trade deficit. The recent spike in Brent crude has forced Indian importers to buy more dollars to pay for fuel, increasing pressure on the rupee and raising the cost of currency hedging.

Foreign portfolio investors have also grown cautious, pulling capital out of Indian equities and bonds as global markets turn jittery. As funds retreat from emerging markets in search of safety, the demand for dollars rises — weakening local currencies. This combination of portfolio outflows and importer dollar demand has compounded the rupee’s descent, making it one of Asia’s worst-performing currencies so far in 2026.

The inflationary implications are immediate and tangible. A weaker rupee inflates the cost of importing not just oil but also essential commodities and intermediate goods used in manufacturing. Transportation, logistics and energy-intensive sectors could feel the ripple effects quickly. Meanwhile, the higher cost of imports can feed into broader inflation metrics, potentially squeezing consumers and prompting policymakers to rethink monetary stances.

In response, the Reserve Bank of India (RBI) has stepped into the market, selling dollars and buying government bonds to curb excessive volatility and stabilize the currency. This type of intervention — aimed at dampening disorderly movements — signals that authorities are acutely aware of the risks that a sharply depreciating rupee poses to the economy.

Yet while interventions can calm markets in the short term, they are not panaceas. Underlying vulnerabilities remain. Unless geopolitical tensions ease and oil prices moderate, the rupee is likely to continue facing downward pressure. India’s heavy energy import dependency, coupled with potential disruptions to remittance flows from the Middle East — a source of much-needed foreign exchange — magnifies this risk.

Ultimately, the rupee’s slide reflects a broader truth: in an interconnected world, domestic economic resilience is increasingly tested by distant geopolitical shocks. For India, diversifying energy sources, enhancing export competitiveness, and building robust capital inflows will be crucial strategies to insulate the rupee and the wider economy against future turmoil.

The widening conflict in West Asia has not remained confined to battlefields and diplomatic corridors. It has spilled onto the streets of the United States, igniting nationwide protests against military strikes and exposing sharp divisions within the Iranian diaspora. The war is no longer only a geopolitical contest; it has become a moral and political fault line across continents.

Across major American cities — from campuses to civic squares — demonstrators have questioned the justification, timing, and legality of the strikes. Many argue that military escalation risks drawing the region into a prolonged conflagration, with unpredictable global consequences. Protesters have invoked the painful memories of past interventions, warning against repeating cycles of war that begin with strategic certainty but end in strategic exhaustion.

Within the Iranian diaspora, the debate is even more complex. While some expatriates view pressure on Tehran as a necessary check on authoritarianism, others fear that external military action will strengthen hardliners at home and deepen civilian suffering. The diaspora’s divisions reflect a broader dilemma: how to oppose a regime without endorsing actions that may harm the very people one seeks to support. Identity, patriotism, and political principle are clashing in deeply personal ways.

In Europe, the reaction has been cautious but controversial. Critics have accused several governments of moral inconsistency — condemning violence rhetorically while offering muted resistance to escalation. A former U.S. ambassador’s description of the European response as “despicable” underscores the frustration felt by those who believe that Western democracies must uphold international law uniformly, not selectively. The charge is serious: that strategic alliances are being prioritized over humanitarian principles.

The protests in America and the criticism in Europe reveal a deeper crisis of confidence in global leadership. Citizens are questioning whether decisions of war and peace are being made transparently and responsibly. They are asking whether diplomacy was exhausted before force was employed. And they are demanding accountability in an era when misinformation, polarization, and political expediency cloud public debate.

War tests not only armies but democracies. It exposes contradictions between values and actions. The images of protestors marching in American cities and diaspora communities debating their conscience remind us that foreign policy is never purely foreign. It reverberates at home — shaping civic trust, national unity, and the credibility of democratic institutions.

If leaders ignore these voices, the cost will extend beyond the battlefield. It will erode the moral authority that democracies rely upon to lead in a turbulent world.

• SAS Kirmani