Rupee Hits Historic Low Of 94.29 Vs Dollar As Sensex Slides And Oil Prices Stay Elevated

The Indian rupee slipped to a fresh all-time low of 94.29 against the US dollar in opening trade on Friday, March 27, extending its recent slide as the ongoing West Asia conflict continued to rattle energy markets and investor sentiment. The domestic currency fell 33 paise at the interbank foreign exchange market, after closing at 93.96 in the previous session.

The latest fall comes as concerns mount that the energy supply disruption triggered by the war in West Asia may persist longer than expected, increasing pressure on energy-importing economies such as India. The rupee has now weakened around 3.5 per cent since the conflict began late last month.

Rupee Opens Weak, Breaks Previous Record Low

At the interbank foreign exchange, the rupee opened at 94.18 against the greenback and slipped further to 94.29, marking a new lifetime low. The domestic unit had already fallen 20 paise to settle at a record closing low of 93.96 against the US dollar on Wednesday.

The previous all-time low stood at 93.98, which had been touched earlier this week. With stock, forex, commodity and bullion markets shut on Thursday for Ram Navami, Friday's opening reflected pent-up pressure from global developments and weak domestic cues.

The rupee's continued decline has become a major concern for markets, especially as crude oil prices remain elevated and foreign capital outflows show little sign of easing.

Oil Prices, Stronger Dollar Add To Pressure

Forex traders said the rupee remained under heavy pressure due to a combination of surging crude oil prices, a firmer US dollar and continued risk aversion across global markets.

"With Brent oil prices again going past $105.75 per barrel, and the dollar index rising towards 100, the rupee opened weak," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

The dollar index, which measures the greenback against a basket of six major currencies, was trading 0.08 per cent higher at 99.67.

Brent crude, the global oil benchmark, had surged overnight before easing slightly. It was trading 0.78 per cent lower at $107.1 per barrel in futures trade, though it remained elevated.

"Brent oil was up to $107.50 per barrel but fell after US President Donald Trump postponed strikes on Iranian power plants by 10 days," Bhansali added.

Higher crude prices are especially negative for India because the country imports a large share of its oil needs, which widens the current account deficit and increases demand for dollars.

Equity Sell-Off, FII Outflows Deepen Rupee Weakness

Domestic market weakness also added to the rupee's troubles on Friday morning, with benchmark equity indices witnessing a sharp sell-off.

The Sensex plunged 926.92 points to 74,346.53 in early trade, while the Nifty dropped 280.95 points to 23,025.50.

Forex traders noted that sustained foreign institutional investor (FII) outflows have further intensified pressure on the local currency. According to exchange data, foreign institutional investors sold equities worth Rs 1,805.37 crore on a net basis on Wednesday.

A falling stock market often leads to increased dollar demand as overseas investors pull money out, which in turn weighs on the rupee.

Analysts Warn Of Further Weakness This Year

While markets remain hopeful that a prolonged conflict in West Asia can still be avoided, analysts believe the rupee may remain under pressure even if geopolitical tensions cool somewhat.

According to Bernstein, there is still a realistic possibility of the rupee breaching the 98-per-dollar mark later this year, largely because of pressure on India's current account balance.

That warning underscores how vulnerable the rupee remains in the current environment, where geopolitical tensions, elevated energy prices, a stronger dollar and capital outflows are all working against the domestic currency.

With the rupee now at a fresh lifetime low and global uncertainty still high, traders and policymakers will be closely watching oil prices, US dollar movement and the trajectory of the West Asia conflict in the coming days.