The rupee slumped about 65 paise against the US dollar on Monday in the wake of failure of the US and Iran to reach a truce deal, rising global crude oil prices, and a strengthening dollar.

This came even as RBI Deputy Governor T Rabi Sankar, in his weekend comments at the Foreign Exchange Dealers’ Association of India annual conference in Paris, reportedly criticised players in the forex market for their role in aggravating the Rupee’s weakness.

The Indian currency closed at 93.3750 per dollar, down about 65 paise, against previous close of 92.7275. It opened weaker at 93.30 per USD against the previous close.

Sankar underscored that the rupee came under pressure not only due to FPI-related outflows but also the arbitrage between onshore and offshore markets.

RBI’s intervention

In order to ensure orderly conditions in the foreign exchange market, the Reserve Bank introduced a prudential measure on March 27 that limited the net open position in INR (NOP-INR) of authorised dealers in the onshore deliverable market to within $100 million at the end of each business day. This was aimed at curbing excessive speculative positioning and mitigating systemic risks.

Amit Pabari, MD, CR Forex Advisors, observed that a silent force — banks unwinding their dollar positions to comply with the RBI’s Net Open Position (NOP) cap (deadline ended on April 10, 2026) – was at play that held up the rupee. This created a steady supply of dollars a cushion that quietly supported the rupee.

“But now? The deadline is over. The cushion is gone. Just as one support faded, another risk emerged and this one comes from far beyond domestic borders. US President Donald Trump has escalated tensions by announcing a potential blockade of the Strait of Hormuz after failed negotiations with Iran. This narrow stretch isn’t just any waterway it carries nearly 20 per cent of the world’s oil supply,” he said.

Pabari assessed that a $10 rise in crude can widen the trade deficit by $13–15 billion annually. This pressure flows into the current account, stretches fiscal balances through subsidies or tax cuts, and ultimately weighs on the rupee.

Dilip Parmar, Senior Research Analyst, HDFC Securities, said the Rupee extended its losing streak to three sessions, recording its deepest drop in a fortnight.

“The downward pressure stems from a spike in crude oil prices after President Trump ordered a blockade of the Strait of Hormuz. All eyes are on the 10:00 AM EST window for potential US military movement following failed diplomatic talks.

“Meanwhile, local sentiment is cautious as investors await India’s CPI data before Tuesday’s holiday. Technically, the USDINR pair is trading between a support level of 92.70 and resistance at 93.65,” he said.

Published on April 13, 2026