Rupee Slides To All-Time Low: Rupee crossed the level of 93 for the first time, know what is the reason for the fall?

Rupee Slides To All-Time Low: On March 19, the Indian Rupee reached its lowest level ever. Disruptions in global energy supply due to the ongoing conflict in the Middle East further increased its losses. This is a situation that threatens to destabilize India’s growth-inflation balance.

The rupee fell 0.65% to 93.24 against the US dollar. This is lower than its previous lowest level of 92.63 recorded on Wednesday. The local currency has fallen by about 2% since the US-Iran conflict began.

Oil prices rose to nearly $120 a barrel on Thursday following attacks on critical energy infrastructure in the Gulf region. However, prices eased somewhat on Friday. Major European countries and Japan have offered to join efforts to ensure safe movement of ships through the Strait of Hormuz, while the US has taken steps to increase oil supplies.

The pressure on the rupee is not expected to ease any time soon as foreign investors have pulled out more than $8 billion from domestic equities so far in March on concerns of a sudden surge in oil prices, the biggest monthly outflow since January 2025. Economists have warned that continued increases in energy prices could slow India’s economic growth and increase inflation.

What is its impact on the rupee?

• Oil Shock: Brent crude prices have increased by nearly 40% since the start of the Iran conflict.
• Dollar demand: Demand for US dollars is increasing due to increasing import bills.
• Foreign outflow: Foreign investors are continuously selling.
• Strong Dollar: Amid rising risks, the US currency is gaining strength due to ‘flight-to-safety’ globally.

What do experts say about the rupee?

Rajesh Palvia, Head of Research at Axis Securities, said: “The Fed’s decision to keep interest rates in the 3.5–3.75% range—along with elevated inflation expectations and rising geopolitical tensions over Iran—further reinforces a ‘high rates for a long time’ cycle, which is well ahead of market expectations.

For India, the key factor is the continued strengthening of the US dollar, which may put pressure on the rupee and lead to a resumption of FII outflows, especially in the debt market. The fundamentals of India’s domestic growth will continue to act as a safeguard against fluctuations in global rates. However, rate-sensitive emerging markets may face some headwinds as expectations for a rate cut in 2026 have shifted further.