The Indian rupee slipped to another fresh low against the US dollar in trade on 23 March, as the greenback’s steady rise, persistent selling by foreign portfolio investors (FPIs), and the escalating US-Israel conflict with Iran continued to weigh heavily on the local currency.
The domestic currency breached the 94 mark against the US dollar for the first time, hitting 94.10 and taking the month-to-date decline to 2.43%. Since the start of the US-Iran war, the rupee has lost over3% of its value.
Earlier this month, the rupee was trading around 91 against the US dollar, and with the latest fall, it has weakened by around 3.4% (taking today’s low into account), placing it among the worst-performing Asian currencies. In comparison, peers such as the Korean won and Thai baht are down 5% and nearly 6%, respectively, since the onset of the conflict.
The sustained decline has led to nearly a 10% fall in the rupee in FY26 so far, positioning it for its biggest fiscal year drop since FY14, when it had depreciated 9.4% against the greenback. Over the last 14 fiscal years, the rupee has strengthened in only two years, including FY17 and FY21.
A weaker currency increases import costs, potentially fuelling inflationary pressures, especially with crude oil already surging over 50% in March. The falling rupee may also impact India Inc’s profitability due to higher input costs.
Heavy selling by FPIs has further weakened the rupee, as overseas investors turned cautious about Asia’s third-largest economy.
So far this month, ₹93,970 crore”>FPIs have sold ₹93,970 crore worth of Indian equities on exchanges, resulting in total outflows of ₹1,07,077 crore in 2026 to date, as per NSDL data. In February, they were net buyers to the tune of ₹22,615 crore.
Meanwhile, the latest data released by the RBI showed that the central bank purchased a net $2.526 billion from the spot forex market in January, according to its monthly bulletin released on Monday.
The purchase of US dollars came after seven straight months of net dollar sales. The last time the central bank had bought dollars was in May 2025, when it purchased $1.764 billion from the spot market.
Rupee outlook remains weak amid elevated crude and fragile macro backdrop: Analysts
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said, “Sustained elevated crude levels are likely to push inflation higher, which in turn may impact growth projections negatively, adding further pressure on the rupee. The macro backdrop remains fragile, and currency weakness is expected to persist as long as geopolitical tensions and energy prices remain elevated.”
In the near term, Jateen Trivedi expects the rupee to trade within a weak range of 93.25–94.25, with sentiment likely to remain negative until any meaningful de-escalation emerges.
Bajaj Broking Research said, “Elevated crude oil prices pose a major macroeconomic challenge for India due to its strong reliance on energy imports. A prolonged rise in oil prices can increase inflationary pressures, widen the current account deficit, and put further pressure on the domestic currency.”
Ponmudi R, CEO of Enrich Money, said the sharp depreciation of the rupee is more than just a currency move; it is a macro signal that adds to inflation concerns and overall economic strain.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment.
