Rupee in freefall: Historic low of 92.35 as oil shock and war rattle markets

The Indian rupee fell 53 paise to close at an all-time low of 92.35 against the US dollar on Monday, weighed down by a sharp rise in global crude oil prices, a stronger dollar, and continued withdrawal of foreign funds from domestic markets.

At the interbank foreign exchange market, the rupee opened at 92.22 and briefly touched 92.15 before losing ground steadily through the session, eventually settling at its record low of 92.35. The currency had closed at 91.82 on Friday, having lost 18 paise that session.

The primary driver was crude oil. Brent crude rose 15.18% to $106.8 per barrel in futures trade, having surged nearly 25% during the Asian session, after both sides in the ongoing conflict between US-backed Israel and Iran struck fresh targets over the weekend. Israel hit oil depots in Tehran, while Bahrain accused Iran of striking a critical desalination plant in the Gulf. The dollar index edged up 0.35% to 99.33 , reflecting broad dollar strength, while foreign institutional investors sold equities worth ₹6,030.38 crore on a net basis on Friday, adding further pressure on the rupee.

The sell-off was felt across Asian markets. Japan's Nikkei 225 fell 5.2% and South Korea's Kospi dropped 6% , with Hong Kong's Hang Seng down 1.6% and China's Shanghai Composite slipping 0.7%, as higher oil prices stoked fears over economic growth across the region.

"The rupee opened sharply lower on weak global markets and an overnight surge in crude oil prices. Strong dollar and FII outflows also pressured the currency," said Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan. He expects the USD-INR rate to trade in the range of 92.00–92.80 , adding that any Reserve Bank of India intervention could provide support at lower levels.

On the equity front, the Sensex fell 1,352.74 points to 77,566.16 and the Nifty dropped 422.40 points to 24,028.05 . India's forex reserves, however, rose $4.885 billion to a record $728.494 billion in the week ending February 27, providing some cushion against the current pressure. A weaker rupee and higher crude prices are expected to push up fuel, cooking gas, and transport costs in the coming weeks.