Rupe͏e Hi͏ts Recor͏d Low of ͏Rs͏ 92.17͏ Against US Dollar as US-Iran War, Oil͏ Above͏ $82 an͏d Dollar Surge Rattl͏e Markets

Mumbai, March 4, 2͏026:͏ The Indian rupee fell to an all-time low of Rs 92.1 against the US dollar on Wednesday, crossing the Rs 92 barrier for the first time amid escalating tensions involving the United States of America, the State of Israel, and the Islamic Republic of Iran, which amplified global risk aversion and ruffled financial markets today.

The currency dropped 71 paise to Rs 92.18 against the US dollar in early trading, marking its biggest single-day percentage decline since January 21, and making it the worst performing Asia currency in the session.

͏Ru͏pee Fa͏lls 71 Paise to Rs 92.1͏8 a͏s Gulf Confl͏ict Esca͏lates

The sharp depreciation came after rising fears o͏v͏er a͏ widening conflict in West A͏sia, which has unsettled global investo͏rs. With ͏uncertainty growing, funds moved out of emerging markets such as India into perceived safe-haven assets, including g͏old and US Treasury bonds.

Equity markets across Asia followed overnight weakness on Wall Street, reflecting a broad reduction in͏ risk exposure. The currency market responded immediately, with the rupee extending losses amid persistent geopolitical tensions and capital outflows.

Brent Crude Above $82 Amid Strait of Hormuz Disruption

A key trigger behind the rupee’s slide has been the surge in international oil prices. Brent crude futures traded above $82 per barrel, reaching eight-month highs after disruptions linked to the Strait of Hormuz heightened supply concerns. Nearly one-fifth of global crude shipments pass through this route, intensifying fears of prolonged supply constraints.

India imports over 80–90 per cent of its crude oil needs, making it particularly vulnerable to sustained oil price spikes. Elevated crude prices increase the import bill, widen the current account deficit and heighten inflationary pressures, all of which weigh on the domestic currency.

The government has stated that oil supplies remain uninterrupted and has considered increasing imports of Russian crude should Middle Eastern flows face disruption.

Dollar Index Climbs to 99.33, Pressuring Emerging Markets

The rupee’s weakness has been compounded by a strengthening US dollar. The US Dollar Index (DXY), which tracks the greenback against six major currencies including the euro, yen and pound, rose as much as 0.3 per cent to 99.33, marking its third consecutive gain.

The dollar’s rise reflects heightened demand for US assets amid dimmed expectations of an imminent rate cut by the US Federal Reserve. Elevated US Treasury yields and global risk aversion have driven capital rotation toward dollar-denominated assets, adding downward pressure on emerging market currencies, including the rupee.

Foreign Investors Sell Rs 3,229 Crore, Outflows Reach Rs 19,000 Crore

Persistent foreign fund outflows have further weighed on the currency. Foreign portfolio investors were net sellers of domestic equities worth Rs 3,229 crore in recent sessions. Year-to-date equity outflows have reached approximately Rs 19,000 crore, equivalent to $2.1 billion.

Such outflows reduce dollar supply in the domestic market while increasing demand for the US currency, intensifying pressure on the rupee during periods of global uncertainty.

Trade Optimism Fades as Geopolitical Risks Rise

Rising tensions in West Asia have also pushed optimism surrounding a potential US–India trade agreement into the background. With geopolitical risks dominating global markets, attention has shifted away from bilateral trade developments toward immediate concerns around energy security and financial stability.

The rupee’s fall to Rs 92.17–92.18 per dollar reflects a combination of geopolitical tensions, crude oil trading above $82 per barrel, a stronger dollar near 99.33 on the DXY, and foreign outflows of Rs 19,000 crore so far this year. Developments in West Asia, global oil supply routes and dollar movements remain central to understanding near-term currency fluctuations.