The Indian rupee briefly breached the 95-per-US-dollar level during intra-day trading on Monday before recovering slightly to settle at 94.78 (provisional), marking a gain of 7 paise against the US dollar. The sharp volatility came amid escalating tensions in West Asia, particularly involving Iran, which unsettled global markets and triggered a risk-off sentiment among investors.
Forex traders noted that the USD/INR pair experienced significant swings, moving within a wide range of 165 paise during the day. The ongoing geopolitical crisis, now in its 31st day, has kept energy markets on edge, contributing to heightened currency fluctuations.
At the interbank foreign exchange market, the rupee opened stronger at 93.62 and further appreciated to 93.57, gaining 128 paise from its previous close. This initial strength followed the Reserve Bank of India’s recent move to reduce the net open position (NOP-INR) limit for banks to USD 100 million through a circular issued on March 27, 2026, with compliance required by April 10.
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Despite the early gains, the rupee failed to sustain momentum and slipped to a record intra-day low of 95.22 against the dollar. It eventually recovered slightly by the close of trading.
On the previous trading session, Friday, the rupee had already plunged by 89 paise to end at a historic low of 94.85 per US dollar, reflecting continued pressure.
Market experts attributed the rupee’s weakness primarily to global factors. With hopes of easing tensions between the US and Iran fading, investors shifted towards safer assets, boosting demand for the dollar and weakening emerging market currencies such as the rupee.
Additionally, the USD/INR pair remains under pressure due to a strong dollar index and rising crude oil prices. Safe-haven demand has kept the dollar index above the 100 level, restricting any significant recovery in the rupee.
Oil prices have also surged amid fears of supply disruptions. Brent crude, the global oil benchmark, rose 2.60 per cent to USD 114.97 per barrel in futures trading, further weighing on India’s currency outlook.
In domestic equity markets, sentiment remained weak. The Sensex dropped sharply by 1,635.67 points to close at 71,947.55, while the Nifty declined by 488.20 points to settle at 22,331.40. Foreign institutional investors also remained net sellers, offloading equities worth Rs 4,367.30 crore on Friday.
Meanwhile, Finance Minister Nirmala Sitharaman stated that India’s economic fundamentals remain strong and emphasised that, compared to other emerging market economies, the rupee is holding up well against the US dollar.
Since the onset of the West Asia conflict on February 28, 2026, the rupee has weakened by around 4.1 per cent, closing at Rs 94.82 per dollar on March 27.
Responding to concerns, Minister of State for Finance Pankaj Chaudhary reiterated that the rupee’s value is market-determined and influenced by multiple global and domestic factors. He added that both the government and the Reserve Bank of India are closely monitoring the situation.
Overall, the rupee has depreciated nearly 10 per cent against the US dollar during the current fiscal year, reflecting sustained external pressures and global uncertainty.
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