The Indian rupee hit a new record low against the dollar, surpassing Rs 92 per dollar due to surging oil prices amidst escalating tensions in the Middle East. Trading at Rs 92.38 to the dollar, the rupee saw an increase of 35 paise or 0.38% from the previous session. Brent crude prices soared to around $85 per barrel recently as military tensions involving the United States, Israel, and Iran heightened.
WTI crude rose above $75 a barrel on Wednesday, marking an 11% gain over two days, while Brent hovered near $81 a barrel due to disruptions in shipping through the Strait of Hormuz, causing concerns about supply chain disruptions. The potential closure of the Strait could impact nearly 40% of India’s energy imports. Currency and fixed income markets remained closed on March 3 for the Holi public holiday.
Analysts advised importers to wait for opportunities to purchase the dollar and closely monitor the Reserve Bank of India’s actions regarding the rupee. They noted that the overall outlook remains positive as long as the pair maintains above the 90.8–91 support level. A sustained position above 92.20 might lead to further gains towards 92.50–92.80, potentially reaching new highs if risk-off flows and oil-driven dollar strength persist, according to market participants.
A report by Bajaj Finserv AMC highlighted that despite a supportive domestic environment of stable growth and moderate inflation, the rupee hit an all-time low due to challenges such as steep US tariffs, geopolitical tensions, and persistent FPI outflows. The sentiment improved significantly following announcements regarding the India–US trade deal. Iran’s retaliatory actions on oil and gas facilities have raised concerns about supply disruptions, pushing up oil prices and fueling worries about inflation. Tehran’s reported targeting of oil and gas infrastructure in Saudi Arabia and threats to shipping in the Strait of Hormuz have contributed to the heightened tensions.
