The Indian rupee has depreciated to a historic low, sliding to ₹92.94 against the US Dollar, as a combination of global and domestic factors weighed heavily on the currency. The downward trend intensified further, with the rupee weakening to ₹93.12, breaching its previous record low of ₹92.63 recorded just a day earlier.
Geopolitical Tensions and Oil Price Surge
A key driver behind the rupee’s decline has been the sharp rise in crude oil prices, triggered by escalating geopolitical tensions in West Asia. Following attacks on critical energy infrastructure in the Gulf region, crude oil prices surged to nearly $120 per barrel on Thursday before easing slightly in subsequent trading.
The ongoing conflict, particularly involving the United States and Iran, has significantly disrupted global energy markets, adding sustained pressure on oil-importing economies such as India.
Global Response to Stabilise Energy Supply
In response to the crisis, several major economies, including European nations and Japan, have indicated their willingness to support international efforts aimed at ensuring safe maritime navigation through the strategically vital Strait of Hormuz. Meanwhile, the United States has outlined measures to enhance oil supply in an effort to stabilise global markets.
Foreign Outflows Intensify Currency Pressure
The rupee’s weakness has also been exacerbated by sustained foreign capital outflows. Rising crude prices and heightened market uncertainty have led to significant investor withdrawals, with over $8 billion exiting Indian equity markets so far in March. This marks the highest monthly outflow since January 2025, reflecting declining investor confidence amid volatile global conditions.
Near-Term Outlook Remains Challenging
Market analysts expect continued pressure on the rupee in the near term, as elevated oil prices, geopolitical instability, and persistent capital outflows continue to shape currency movements. The evolving global scenario underscores the vulnerability of emerging market currencies to external shocks, particularly in periods of heightened geopolitical risk.
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