Mumbai, March 12, 2026
The Indian rupee sank to a fresh all-time intra-day low of 92.36 against the US dollar on Thursday, extending its sharp decline as escalating tensions in West Asia fueled a relentless surge in global crude oil prices and intensified pressure on emerging market currencies.
Opening at 92.25 in the interbank forex market, the rupee quickly lost ground, dropping 35 paise to breach the previous records amid a combination of external shocks. Traders cited the ongoing Iran-Israel conflict—now involving broader regional players—as the primary driver, with Brent crude prices climbing well above $100 per barrel on fears of supply disruptions through key routes like the Strait of Hormuz. Higher oil import costs for energy-dependent India directly boost dollar demand, weakening the rupee further.
A strengthening US dollar index, fueled by safe-haven flows during geopolitical uncertainty, added to the strain. Domestic factors compounded the slide: heavy foreign institutional investor (FII) selling in equities, as risk-averse global funds exited volatile markets, and a sharp downturn in Indian stock indices weighed on sentiment. The rupee’s depreciation has accelerated in recent sessions, with the currency already down over 2.5% year-to-date amid persistent West Asia volatility.
Despite the intraday plunge, the rupee staged a partial recovery later in the session, settling around 92.17 (provisional), down 16 paise from the previous close, as suspected interventions by the Reserve Bank of India (RBI) helped cap steeper losses. Analysts noted that RBI has been active in both onshore and offshore markets to manage volatility, drawing on forex reserves to support the currency.
The depreciation poses challenges for India’s economy, inflating import bills for crude and widening the current account deficit. It also risks stoking imported inflation, particularly for fuel and commodities, at a time when households already grapple with energy cost pressures from the same global disruptions.
Market participants remain watchful for any de-escalation signals from West Asia or fresh RBI actions. Sustained high oil prices could prolong rupee weakness, while easing tensions might offer relief. For now, the currency hovers near historic lows, reflecting broader vulnerabilities in oil-importing economies amid the conflict.
