Rupee Recovers After Hitting Record Low

The Indian rupee fell to around 92.3 per dollar, extending losses for another session after hitting a fresh record low, as escalating tensions in the Middle East boosted demand for the US dollar and stoked concerns over oil supply. Brent crude hovered near $100 a barrel after a volatile week, while West Texas Intermediate stayed near $95. The surge followed Mojtaba Khamenei’s first comments since succeeding his father, pledging to keep the Strait of Hormuz closed, a key route for global crude and natural gas. In India, investors assessed the latest inflation data, showing consumer prices rising 3.21% year-on-year in February 2026, up from 2.74% in January, marking the fastest pace in 11 months. Rising inflation and crude prices from the Strait of Hormuz may prompt the Reserve Bank of India to tighten or maintain a cautious interest rate stance to curb inflation while supporting growth.

The Indian rupee held around 91.9 per dollar, recovering modestly from a record low in the previous session as the Reserve Bank of India stepped up measures to stabilize financial markets. The RBI has remained active in foreign-exchange markets, with estimates suggesting it may have sold $18 billion–$20 billion last week alone. The central bank has also used buy-sell swaps to replenish liquidity and support market stability. However, the recovery faced headwinds from fluctuating crude prices and persistent foreign outflows from Indian equities. Although brent crude has eased to around $88 per barrel from earlier peaks near $120 during the height of supply disruption fears. Adding to the pressure, foreign investors have continued trimming their exposure to Indian stocks, withdrawing nearly $4 billion so far this month.

The Indian rupee slipped past 92 per dollar, marking its lowest level on record, pressured by soaring oil prices and heightened geopolitical tensions in the Middle East. Brent crude has jumped nearly 25% this month, nearing $95 per barrel, stoking concerns over India’s energy import bill and its impact on inflation and the current account. The Reserve Bank of India intervened last week to support the currency, but further gains in oil pushed the rupee lower as importers hedge and exporters hold back amid uncertainty. Broad risk-off sentiment and rising demand for the US dollar continue to amplify pressure on the rupee, keeping it highly sensitive to developments in energy markets and the geopolitical situation. Investors are also eyeing India’s external account vulnerabilities, including remittance inflows from the Gulf, which account for roughly 3.5% of GDP. Analysts warn that a prolonged conflict in the region could dent these inflows, adding further downside risk to the currency.