The Indian rupee has hit a historic low against the US dollar, raising concerns over whether it could weaken further amid ongoing geopolitical tensions linked to the US-Iran conflict. Reported by Mint.
The rupee slipped past the 93 mark for the first time on Friday, recording its sharpest single-day fall in more than four years. The decline comes as global energy supply disruptions, triggered by the war in Iran, continue to impact Asia’s third-largest economy.
The currency dropped by over 1% to 93.7350 per dollar, breaching its previous record low of 92.63 earlier in the same week. It eventually closed at 93.71, marking a weekly fall of around 1.3% — its steepest decline since late 2022.
Market experts point to persistent foreign institutional investor (FII) outflows as a major factor behind the fall. Investors have pulled out more than Rs. 1 lakh crore in CY2026, reflecting a broader risk-off sentiment toward emerging markets amid global uncertainty.
“This has coincided with a sharp appreciation in the U.S. dollar index, which has rebounded from levels of around 95.50 to above 99.50, even testing highs of 100.50 recently, thereby exerting additional pressure on emerging market currencies, including the rupee,” said Sugandha Sachdeva, Founder of SS WealthStreet.
Why Indian rupee is falling?
The escalation of geopolitical tensions in West Asia has intensified the pressure on the rupee. Brent crude oil prices have surged to around $120 per barrel following the conflict that began in late February, raising concerns about imported inflation and a widening current account deficit.
India imports nearly 85–88% of its crude oil requirements, so higher oil prices increase the demand for dollars among importers, putting downward pressure on the rupee.
Additionally, supply disruptions near the Strait of Hormuz — a critical global oil transit route — have triggered concerns across multiple sectors, including fertilisers, aviation, chemicals, and manufacturing inputs. This has further amplified inflationary pressures and external imbalances.
Domestic factors have also played a role. A correction of around 13% in Indian equity markets from their peak has weakened investor sentiment, leading to capital outflows and increased currency volatility.
Sachdeva noted that while the Reserve Bank of India (RBI) has been actively intervening in the forex market to manage volatility and limit excessive depreciation, global factors continue to dominate. The US Federal Reserve’s hawkish stance and reduced expectations of rate cuts have strengthened the dollar, limiting any meaningful recovery in the rupee.
Can the Indian Rupee touch 100 per dollar?
According to Sachdeva, the rupee is expected to remain under pressure in the near term, with immediate depreciation likely toward the 94.80–95 range.
“The 95 level emerges as a critical psychological as well as structural threshold, and a decisive breach above this mark could potentially accelerate the depreciation trend, opening the door towards 97.80–98.00 levels. While intermittent intervention by the RBI and any temporary cooling in crude oil prices may provide short-term stability to the currency, the broader bias remains weak. Sustained strength in crude prices, along with a resilient US dollar, is likely to continue exerting downward pressure on the rupee, thereby keeping risks tilted toward further depreciation,” she added.
Meanwhile, Anuj Gupta, a SEBI-registered market expert, also expects further weakness in the rupee due to continued pressure from equity market declines, rising crude oil prices, and sustained FII outflows.
“Higher dollar index after stabilizing interest rates impact negatively on rupee against dollar . We are expecting rupee may test 94 to 95 levels in a near term,” Gupta said.
ISSUE
Leave a Comment