India’s rupee continues to weaken despite extensive efforts by the Reserve Bank of India (RBI) to stabilize the currency, coming within 0.2 percent of its record low of 96.97 against the U.S. dollar recorded in May. This persistent depreciation highlights investor concerns over high crude oil prices and rising global interest rates.

Over the four weeks ending October 2, the RBI’s foreign exchange reserves fell sharply by $51 billion to $734 billion as of October 6, down from a peak of $785 billion in early September. The central bank’s interventions, including a special window launched to encourage dollar deposits that attracted $133 billion, have failed to offset significant outflows. Analysts estimate that more than one-third of these inflows have already been depleted. The decline is also influenced by the strengthening U.S. dollar.

“The sharp decline in the RBI’s reserves is a cause of concern and it is something that the market is closely watching,” said Ritesh Bhansali, deputy chief executive officer at Mecklai Financial Services Pvt. “At present, the central bank’s intervention is the only factor that is keeping the rupee where it is.”

India’s rupee has fallen over 7 percent this year, a trend attributed in part to the country’s heavy reliance on oil imports, which renders the currency vulnerable amid geopolitical tensions in the Middle East that have driven crude prices higher.

In a bid to restrain the slide, the RBI implemented its first interest rate increase in nearly four years. However, the rate hike provided little immediate relief for the currency’s decline.

Addressing concerns over reserve adequacy, RBI Governor Sanjay Malhotra emphasized that foreign exchange reserves “continue to remain adequate,” noting that imports are covered for approximately eleven months and that external debt stands at 94.4 percent of reserves. Malhotra also suggested that the rupee may be undervalued and that market fluctuations can be “irrational in the short run.”

As the Reserve Bank continues its efforts to support the rupee, market participants remain wary of the currency’s near-record weakness, amid ongoing global economic pressures and domestic vulnerabilities.