Indian Rupee Falls to Lowest on Record

The Indian rupee eased to around 92.6 per dollar, reversing slightly from a three-week high as concerns over global risk sentiment and domestic macroeconomic pressures continued to weigh on the currency. Market concerns intensified amid renewed geopolitical escalation, where rhetoric from US leadership included not only pressure over the Strait of Hormuz but also direct warnings targeting Tehran over its broader conduct in the ongoing conflict. Within the domestic economy, inflation is expected to stay elevated at around 4.9% this fiscal year, driven by higher food and energy costs and exchange-rate pass-through. Meanwhile, growth is projected to slow to about 6.9% in fiscal 2027, signaling weaker momentum that may dampen foreign investment inflows. Some support for the rupee has emerged from domestic banking activity following regulatory tightening by the Reserve Bank of India, which required lenders to sharply reduce net open positions in the currency market.

The Indian rupee strengthened to around 92.4 per dollar, extending gains for a second session to a month-high, supported by plunging oil prices and a broad rally in Asian currencies following a two-week Middle East ceasefire. The agreement, reached by Donald Trump less than two hours before a self-imposed deadline to reopen the Strait of Hormuz, eased geopolitical uncertainty and boosted risk assets while helping to normalize energy flows and shipping activity. The rupee received further support as the Reserve Bank of India announced its first monetary policy decision of fiscal year 2026/27, leaving the key repo rate unchanged at 5.25% for the second consecutive meeting. Investor sentiment was also bolstered by trade developments, with India and New Zealand expected to sign a Free Trade Agreement on April 24. The deal is projected to provide tariff-free access for Indian goods in the New Zealand market and could attract up to USD 20 billion in investment over the next 15 years.

The Indian rupee hovered near 93 per dollar, trading in a narrow range as central bank–led unwinding of arbitrage positions provided support ahead of the upcoming policy decision. The currency has recovered from levels near 95 amid easing uncertainty over Reserve Bank of India policy measures, with ongoing bank position adjustments expected to sustain near-term stability. However, gains were limited as markets remained on edge over geopolitical tensions. Heightened rhetoric from Donald Trump fueled concerns of a potential escalation with Iran, with warnings of severe consequences if a deal over key transit routes is not reached. Over the past year, the rupee has depreciated 8.2%, and efforts to defend the currency have led to a $40 billion drawdown in foreign-exchange reserves over the last four weeks. Market participants are now eyeing the RBI’s policy decision on April 8 for further guidance on interest rates and liquidity.