Rupee hits record low at 93.84 against US Dollar as US-Iran war boosts crude oil prices

The Indian rupee dropped to an all-time low on Monday, March 23, as rising tensions in the Middle East heightened concerns about ongoing disruptions to energy supplies, jeopardizing the forecast for Asia’s third-largest economy.

The rupee declined to 93.84 against the US dollar, surpassing its previous record low of 93.7350 set on Friday, March 20. Since the onset of the conflict, the rupee has depreciated approximately 3%, as it is one of the currencies most vulnerable to prolonged increases in oil prices.

Asian currencies fell by 0.1% to 0.8% as the prospects for a resolution to the conflict diminished over the weekend, with Washington and Tehran exchanging threats as the war marks its fourth week, according to a Reuters news report.

The ongoing conflict has driven oil prices up by more than 50% this month. The International Energy Agency has stated that the current crisis is more severe than the combined oil shocks of the 1970s, as per Reuters report.

Brent crude prices around $113 a barrel present a significant challenge for India, one of the largest oil importers globally. Ongoing elevated oil costs drive inflation, increase external deficits, devalue the rupee, and lead to higher foreign capital outflows.

In March, foreign portfolio investors have offloaded $9.57 billion in Indian stocks, heading towards the largest monthly outflows since October 2024.

Rupee Outlook

BofA Global Research predicts that the rupee will be valued at 94 by June 2026, an increase from its previous estimate of 89, contingent on the current crisis being resolved within a few weeks.

Amit Pabari, MD, Research Team, CR Forex Advisors also believes, the rupee is now approaching an important level. The 94.00 mark is expected to act as a strong resistance, given its psychological significance. On the downside, support is seen in the 92.80–93.00 range.

“Going ahead, the direction will largely depend on geopolitical developments. Any de-escalation could trigger a quick recovery of 1.00–1.50 rupees, while continued tensions may keep the currency under sustained pressure,” said Pabari.

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