The Indian Rupee hit a new record low on Friday, March 13, dropping to 92.44 against the US Dollar during intra-day trading as rising global oil prices and increasing tensions in West Asia unsettled financial markets. The local currency fell by 19 paise from its prior closing, influenced by a stronger dollar, continuous outflows of foreign funds, and significant drops in domestic equities, according to forex traders cited in a PTI report.
Global risk sentiment stayed delicate due to geopolitical tensions and a spike in oil prices. The US Dollar Index, which measures the dollar against six major currencies, increased by 0.04% to reach 99.77, indicating widespread strength in the US dollar. At the same time, Brent Crude, the global oil standard, surged nearly 5% to $96.57 per barrel in futures trading, raising alarms for oil-importing nations like India.
The pressure on the was intensified by a downturn in domestic stocks. The BSE Sensex fell sharply by 917.69 points to close at 75,116.73, while the Nifty 50 dropped by 308.40 points to finish at 23,330.75, signaling a general risk-averse attitude among investors.
Foreign institutional investors have continued to withdraw funds from Indian markets, contributing to pressures on the currency. Based on exchange data, overseas investors sold equities totaling ₹7,049.87 crore on a net basis on Thursday.
At the same time, worries about inflation have reemerged. As reported by the government, India’s retail inflation increased to 3.21% in February, up from 2.74% in January, primarily due to rising food prices.
The combination of increasing prices, ongoing capital outflows, and escalating inflation concerns has heightened volatility in the currency markets, putting significant pressure on the rupee in the short term.
Where does it go from here?
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, explained that the war, rising crude price and its potential impact on the Indian economy has further aggravated the FII selling. This, along with the widening trade deficit, may depreciate the rupee further towards 93 level if the doesn’t intervene.
Even after the recent market correction FIIs continue to prefer cheaper markets like South Korea, Taiwan and China to the relatively expensive Indian market. Therefore, in the near-term, FII selling may continue, believes Vijayakumar.
Further, Amit Pabari, MD, CR Forex Advisors, said that the 91.40–91.50 zone is expected to act as strong support for USD/INR in the near term, and as long as this level holds, the broader bias remains upward.
“On the upside, USD/INR could gradually move toward the 92.50–92.80 range in the coming sessions, especially if oil prices remain elevated and geopolitical tensions persist,” said Pabari.
Meanwhile, the dollar has been strengthening, supported by the recent economic data from the US, adding further pressure on emerging market currencies. At the same time, US 10-year Treasury yields have climbed toward the 4.25% level, reflecting persistent inflation concerns.
Together, these signals have raised expectations that themay delay interest rate cuts. This outlook has lent support to the US dollar while weighing on emerging market currencies such as the Indian rupee. A stronger dollar, coupled with rising crude oil prices, is adding further pressure on the rupee.
Can Rupee Hit 100 Against Dollar
Some experts do not rule out the possibility of rupee hitting 100 level against the US dollar if the macroeconomic situation continues to worsen.
Tushar Badjate, Director of Badjate Stock shares Pvt Ltd, believes that India’s rising import bill, widening current account pressures due to higher energy prices, and sustained dollar strength globally could keep the rupee on a gradual depreciating path.
“Over the longer term, if these macro trends persist, USD/INR moving towards the 100 level cannot be ruled out,” said Badjate.
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