The rupee fell sharply in the non-deliverable forward market (NDF) on Thursday after attacks on key Gulf energy facilities heightened economic risks for energy-importing countries globally.
The 1-month USD/INR NDF was quoted at about 93.70 to the dollar, indicating the rupee will slip to a lifetime low past the 93 per dollar mark when onshore spot trading resumes on Friday.
The spot rupee had fallen to a low of 92.63 on Thursday and traders reckon that steeper losses are in store for the currency unless the central bank intervenes.
Oil prices rose after Iran attacked several West Asia energy facilities following a strike on its South Pars gas field, in a major escalation in the U.S.-Israeli war. Brent crude oil futures were up over 4 per cent at $112.2 per barrel as of 11:00 a.m. IST.
The war has disrupted shipments through the Strait of Hormuz, prompting the Indian government to assess fuel-supply requests from its neighbours and prioritise domestic requirements.
“India’s external balances are highly levered to energy imports and remittances from West Asia,” Goldman Sachs analysts said in a note.
The rupee, among currencies of energy importers that have been relatively resilient due to central bank action despite underlying vulnerabilities, could see further pressure if the conflict is prolonged, they added.
The firm expects the currency to weaken to 95 over the next 12 months.
India’s benchmark Nifty 50 index fell 2 per cent on Thursday, tracking losses in Asian stocks, while the local debt and FX markets were shut for a holiday.
MACRO RISKS
If oil prices average $100 a barrel for close to 12 months, India could see growth slow sharply and inflation rise, according to economists.
Traders expect swap rates to rise when markets resume trading on Friday, with the curve likely to reprice at least 7-12 basis points higher across tenors.
Swap rates have already surged 25-45 bps since the war started on February 28.
“In case the conflict continues to remain unresolved, and as a consequence, oil prices stay above $100 per barrel on a sustained basis, risk of entrenchment into inflation could trigger discussions on possible RBI action to contain inflationary pressures,” said Basant Bafna, head of fixed income at Mirae Asset Investment Managers (India).
OIS rates are typically a key barometer of policy rate expectations, but economists have stated that the current move may be overstating the impact of the war.
Published on March 19, 2026