Rupee sees sharp fall, crosses 92.5 for the first time, hits record low of 92.62 vs US Dollar

Rupee sees sharp fall, crosses 92.5 for the first time, hits record low of 92.59 vs US Dollar

• Rupee hits record low of 92.62 per dollar amid oil price surge
• Brent crude up 40% since Iran War, raising India's import bill
• Geopolitical tensions, US Fed decision pressure rupee

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The Indian rupee fell to its lifetime low on March 18, extending a rough patch as the raging conflict in the Middle East kept oil prices elevated, raising economic risks for India while also sapping capital flows.

The rupee fell to 92.62 per dollar, eclipsing its previous low of 92.4750 hit last week.

Brent crude oil prices have climbed about 40% since the Iran War began. The conflict has since sent shockwaves throughout global markets as energy importing economies grapple with the most severe supply disruption in decades.

The rupee is down over 1.5% since the war began. In that time, the yuan has slipped 0.2% and the Singapore dollar dipped 0.8%.

"The escalation in the Middle East will likely exacerbate the divergent external picture for India and China, with the former facing relatively more pain," Mitul Kotecha, head of Barclays' FX & EM macro strategy Asia, said in a note.

Barclays pointed to China's resilient exports and large buffers against the oil shock.

China is estimated to have strategic and commercial crude reserves of around 1.2 billion barrels. Barclays' economists expect it to log a record trade surplus above $1.3 trillion this year.

The yuan has rallied nearly 15% against the rupee since May 2025, and Kotecha believes there is further room to run, recommending a long yuan/rupee position via a six-month non-deliverable forward.

"Higher energy costs raise India’s import bill, which typically weighs on the rupee. Market participants are also cautious ahead of the US Federal Reserve’s interest rate decision this week, which could influence global dollar flows and emerging market currencies. Additionally, concerns surrounding potential disruptions to oil and gas supplies through the Strait of Hormuz are keeping sentiment fragile. If geopolitical tensions persist and energy prices remain elevated, the rupee may continue to face downside pressure. In the near term, the weak trading range for the rupee is expected between 91.95 and 92.65 against the US dollar," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

"Surging global crude oil prices—driven by escalating tensions in West Asia—and sustained foreign fund outflows amid heightened risk aversion have kept the rupee under significant pressure. Furthermore, aggressive dollar demand from importers and traders intensified as the currency breached the record high. Spot USDINR maintains a bullish bias, with immediate resistance anticipated between 92.50–92.70 and a support at 92.05," said Dilip Parmar – Senior Research Analyst, HDFC Securities.