The rupee plummeted below 93 to a dollar on Friday as importers jostled for dollars, breaching a psychologically crucial level. The local currency, which has lost 3% since the outbreak of the West Asia war, may remain weak for the near term, experts said, as escalating conflict keeps crude oil prices elevated.
After trading at around 93.4850 during the day, the rupee slipped to a closing low of 93.7075, marking a loss of over ₹1.07 from Thursday’s close of 92.6350. The US-Israel war against Iran, and Iran’s counter-strikes on energy assets in the Gulf, have lifted crude oil prices, amplifying concerns over India’s current account deficit, inflation, and growth outlook.
While the Reserve Bank of India was present in the currency market, intervention appeared measured rather than aggressive.
“The momentum of the USD-INR pair was very strong today. There was likely some intervention, but it appeared muted given that it’s the year-end and it would adversely impact rupee liquidity. There are multiple objectives which a central bank has to manage,” Rajeev Pawar, treasury head at Ujjivan Small Finance Bank said.
The RBI’s foreign exchange reserves have fallen to $709.76 billion according to the latest data available till 13 March, from $728.49 billion as of 27 February.
“The situation continues to worsen, with increasing reports of damage to critical oil infrastructure in the Gulf region. If the conflict persists for an extended period, the implications for the global economy and particularly for India, could be severe, potentially exceeding the impact witnessed during the global financial crisis and the covid-19 pandemic,” said VRC Reddy, treasury head at Karur Vysya Bank.
“If the current situation persists, depreciation pressures could continue. However, the rupee has already weakened by about 5-6% in 2025, and around 8-9% since January last year. In normal conditions, a 2.5-3% annual depreciation is typical; so, a repeat of last year’s sharp fall may not necessarily happen unless the crisis worsens significantly,” he said.
The price of crude oil, which has shot up since the outbreak of the war, continues to play havoc with the currency. India imports over 85% of its crude oil, meaning high global oil prices boost the country’s import bill and demand for US dollars, putting downward pressure on the rupee.
“The rupee witnessed sharp weakness, depreciating by over ₹1 to 93.70 against the dollar, as markets aggressively priced in the negative impact of elevated crude oil prices. Sustained strength in crude is expected to significantly widen India’s import bill, putting continued pressure on the domestic currency,” Jateen Trivedi, vice-president and research analyst of commodity and currency at LKP Securities said.
In the near term, dealers see the rupee trading in a weaker range, with levels beyond 93.30-93.50 increasingly likely if external pressures persist. If the RBI doesn’t intervene to protect the 93.50 level, the rupee could also go to 94, they said.
They believe the RBI is more focused on curbing volatility than defending a specific level.
“The macro environment remains unfavourable for the rupee, with higher energy costs and persistent dollar demand weighing on sentiment. Unless crude prices ease meaningfully, the rupee is likely to stay under pressure,” Trivedi said.
He expects the rupee to trade in a weaker range of 93.00-94.25 against the US dollar.
