New Delhi, May 18 -- The Indian currency has been experiencing sharp depreciation amid the West Asian crisis, driven largely by rising energy prices and moderating capital flows. That said, the weakness of the Indian rupee has been a persistent concern over the past year, even before the conflict began. It has depreciated by about 11% over the past year, with about 5% of this value loss having occurred after the US-Iran war began on 28 February.

The main concern for the rupee is India's weak balance-of-payments position. High global crude oil prices are likely to push up India's import bill, while exports to West Asia and remittances from the region will also face the brunt of the crisis. We expect India's current account deficit (CAD) t...