Virendra Pandit
New Delhi: Reports about a likely fresh round of war looming between the US-Israel and Iran dragged down markets worldwide on Thursday, as the Indian rupee slid to a historic low of Rs. 95.33 per US dollar, but recovered to Rs. 94.91 while Sensex and Nifty ended nearly 0.75 percent each, the media reported.
The price of Brent crude oil also surged past USD 125 a barrel on early Thursday as stalled US-Iran talks raised doubts over the reopening of the Strait of Hormuz and an end to the Iran war.
Brent crude to be delivered in June jumped 6.2 per cent to USD 125.36 on early Wednesday. Brent to be delivered in July rose 3.1 per cent to USD 113.85.
Before the start of the on February 28, Brent crude was trading at just around USD 70 per barrel.
The Iran war, which is in its ninth week, still sees no clear path to an end. The US has continued its blockade of Iranian ports while the Strait of Hormuz, is closed, pushing oil prices higher.
US futures and share prices in Asia also retreated.
Impact on India
India’s benchmark index Sensex lost 582.86 points (minus 0.75 per cent) to end at 76913.50 while Nifty was down 180.10 points (minus 0.74 per cent) and closed at 23997.55.
The Indian rupee fell to a record low, as investors fretted over the economic risks confronting India from a resurgence in crude oil prices to 2022 highs, threatening the inflation-economic growth balance for the net energy importer and sapping capital flows.
The currency fell to Rs. 95.33 per US dollar, down as much as 0.5 per cent on the day, eclipsing its previous all-time low of Rs. 95.21 hit in late March 2026. It subsequently pared losses to end at Rs. 94.91, only marginally weaker compared to the previous session.
Oil-sensitive Asian peers such as the Indonesian rupiah also weakened on Thursday, after Brent crude futures climbed to USD 126.4 per barrel, the highest in four years, before turning lower on the day in a volatile session.
The Indian rupee’s fall has wiped out gains spurred by the central bank’s use of rare currency-supportive regulatory measures in March, leaving the currency flat month-on-month even after it rallied to Rs. 92.40 earlier in April.
The reversal has prompted traders and analysts to suggest that fresh regulatory measures could be on the cards, according to a media report.
The Indian rupee has declined over 5 per cent so far in 2026, adding to similar sized drop last year, in a period where India’s external sector has faced persistent headwinds ranging from trade frictions with the US to weakness in capital flows and the most severe energy supply disruption in recent history.
Persistent weakness in the currency may also drive a negative feedback loop on foreign capital flows by eroding overseas investors’ returns while adding to inflationary pressures by lifting import prices, analysts say.
Reflecting that anxiety, foreign investors have offloaded over USD 20 billion of Indian stocks and bonds over March and April 2026 so far, nearly double the USD 11.8 billion of outflows from the same markets across 2025.
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