The currency fell to a lifetime low of 92.4325 per dollar amid escalating tensions in West Asia and rising oil prices.
The central bank reportedly stepped into spot, NDF and futures markets to curb excessive depreciation.
Analysts warn the rupee could breach 93 in the near term and potentially cross 95 if geopolitical tensions keep crude prices elevated.
The rupee fell to a lifetime low of 92.4325 per dollar on Friday following rising worries over the situation in West Asia is impacting investor sentiment and oil prices. A prolonged escalation of the geopolitical tension could send crude prices to sore further or stabilise above $90 per barrel could put pressure on the domestic currency to breach the psychologically crucial level of 95 per dollar. As per market participants, the Reserve Bank of India intervened in the market, however sparingly, which limited the rupee’s sharper fall and curbed excessive volatility in the rupee market.
As per reports, the central bank intervened across the domestic spot market, the non-deliverable forwards market and the futures market. Investor sentiments remain jittery as there are no signs of a conflict resolution. On Friday, Iranian Supremo Mojtaba Khameini vowed to keep the Strait of Hormuz, hinting at its ‘strategic pressure’ approach toward the war. The Strait of Hormuz is a lifeline to global trade, with 40% of global trade passing through it. Following the tensions, foreign portfolio investors sold nearly ₹8,400 crore from the domestic markets on March 12, according to the latest data by NSDL.
2 March 2026
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“Rupee made a new low following rise in dollar index to a three month high. The fall in equities and surge in crude prices also weighed. The RBI is allowing slow and steady depreciation,” Anil Kumar Bhansali, head of treasury at Finrex LLP said. “With the equities level, even RBI may leave it to the market,” he added. Market analysts and participants see the rupee to breach $93 per dollar in the near term and could even breach $95 against the greenback by May if the war prolongs.
The rise in dollar index amid shifting investor sentiment toward safe-haven assets also weigh on the rupee. The index, which measures the strength of the dollar against a basket of six major currencies hit a three month of 99.83 during Asian market hours.
According to a report by MUFG, a sustained rise in crude oil prices could significantly weaken the rupee. The bank’s sensitivity analysis suggests that if oil prices remain around $100 per barrel, the USD/INR could end the year near 95.50. In a more adverse scenario—where crude climbs to $120 per barrel alongside significant energy shortages—the rupee could depreciate further, with USD/INR potentially reaching 97.50 or even higher.
