Rupee Hits Record Low: Crosses 92.5 for First Time vs US Dollar
Indian Rupee Hits Lifetime Low Amid Ongoing Middle East Conflict
On March 18, the Indian Rupee (INR) fell to a lifetime low of 92.62 per US dollar, extending its decline amidst the ongoing conflict in the Middle East. The ongoing war has led to a significant increase in Brent Crude Oil Prices, which have risen approximately 40% since the conflict began.
The Rupee has declined by over 1.5% since the war started, outpacing the decline of other major currencies such as the Singapore Dollar (-0.8%) and the Chinese Yuan (-0.2%). According to Barclays, the escalation of the Middle East conflict will exacerbate the divergent external picture for India and China, with India facing relatively more economic pain.
China is expected to benefit from its large oil reserves, estimated to be around 1.2 billion barrels, and its resilient exports. Barclays' economists forecast a record trade surplus of over $1.3 trillion for China this year.
The Yuan (CNY) has rallied nearly 15% against the Rupee (INR) since May 2025, with Barclays recommending a long Yuan/Rupee position via a six-month non-deliverable forward. Market participants are cautious ahead of the US Federal Reserve's interest rate decision, which could influence global dollar flows and emerging market currencies.
Key Risks and Outlook
Higher energy costs are expected to raise India's Import Bill, weighing on the Rupee. Market participants are also concerned about potential disruptions to oil and gas supplies through the Strait of Hormuz, keeping sentiment fragile. If geopolitical tensions persist and energy prices remain elevated, the Rupee may continue to face downside pressure.
In the near term, the weak trading range for the Rupee is expected to be between 91.95 and 92.65 against the US dollar.
Read also: RBI Policy Preview: A Cautionary Wait Ahead
Market Analysis
Surging global crude oil prices, driven by escalating tensions in West Asia, and sustained foreign fund outflows amid heightened risk aversion have kept the Rupee under significant pressure. Aggressive dollar demand from importers and traders intensified as the currency breached the record high. The spot USDINR maintains a bullish bias, with immediate resistance anticipated between 92.50–92.70 and a support at 92.05.
Investor Takeaway
Investors should be cautious of the potential economic risks for India due to the elevated oil prices caused by the conflict in the Middle East.
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