The rupee on Monday breached the 95/USD-mark in intra-day trade on Monday and settled at 94.78 (provisional) against the American currency after Iran war escalation jolted global markets, fuelling rupee volatility and risk-off sentiment.
Volatility spikes as West Asia crisis deepens
Forex traders said the USD/INR pair witnessed high volatility and swung 165 paise during intra-day trade as the West Asia crisis entered the 31st day keeping energy markets nervous.
At the interbank foreign exchange, the rupee opened at 93.62 and then gained further ground to 93.57 against the US dollar, registering a gain of 128 paise from its previous close, after the Reserve Bank brought down the net open position that banks can keep overnight at USD 100 million.
Through its circular dated March 27, 2026, the RBI capped the Net Open Position (NOP-INR) for banks at USD 100 million, with compliance required by April 10.
Fails to hold gains, hits record intra-day low
However, it failed to sustain the momentum and fell to an all-time intra-day low of 95.22 in intra-day trade against the American currency.
At the end of Monday’s trading session, the rupee was quoted at 94.78 (provisional), 7 paise higher from its previous close of 94.85 against the greenback.
On Friday, the rupee slumped by a massive 89 paise to close at a historic low of 94.85 against the US dollar.
Global risk-off mood drives rupee weakness
“At the core of this weakness is the global backdrop. Hopes of de-escalation between the US and Iran faded, bringing back risk aversion. And when uncertainty rises, markets naturally shift towards safer assets strengthening the dollar and weakening emerging market currencies like the rupee,” CR Forex Advisors MD Amit Pabari said.
Forex traders said the USD/INR pair is facing pressure from the elevated dollar index and crude oil prices. Safe-haven demand is keeping the dollar index firm above the 100-mark, limiting any meaningful recovery in the rupee.
Moreover, rising geopolitical tensions quickly reflected in oil prices, and Brent crude surged as fears of supply disruptions increased, they added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.15 per cent lower at 100.30.
Brent crude, the global oil benchmark, was trading at USD 114.97 per barrel, up 2.60 per cent, in futures trade.
Equity market slump, FII outflows add pressure
On the domestic equity market front, Sensex dived 1,635.67 points to settle at 71,947.55, while the Nifty slumped 488.20 points to 22,331.40.
Foreign institutional investors sold equities worth Rs 4,367.30 crore on a net basis on Friday, according to exchange data.
Government maintains confidence in fundamentals
Meanwhile, Finance Minister Nirmala Sitharaman on Monday said the country’s economic fundamentals are strong, and compared to other emerging market economies, the Indian rupee is “absolutely going fine” against the US dollar.
Since the commencement of the West Asia conflict on February 28, 2026, the rupee has depreciated by 4.1 per cent to close at Rs 94.82 per USD on March 27, 2026.
Replying to the question, Minister of State for Finance Pankaj Chaudhary said the value of the rupee is market-determined and is influenced by various factors.
“The government and the RBI are keeping a close watch on the value of the rupee,” he said.
Rupee down nearly 10% in FY26
The rupee (INR) depreciated nearly 10 per cent against the US dollar in the current fiscal year.
Published on March 30, 2026