Rupee Recovery Offers Brief Relief After Forward Market Crosses 100/USD Mark

The Indian rupee recovered slightly on Thursday after triggering major concerns in currency markets by crossing the psychologically significant 100-per-dollar mark in the one-year forward market , even as rising crude oil prices, persistent foreign investor outflows and escalating Middle East tensions continued to weigh heavily on the domestic currency and stock markets.

The rupee traded around 96.25–96.43 per US dollar after US President Donald Trump indicated that negotiations with Iran were progressing and suggested planned strikes had been delayed. The recovery came a day after the rupee touched a historic low of 96.96 in spot trade, while the one-year forward contract breached the 100-mark for the first time, signalling expectations of prolonged weakness in the Indian currency.

Forex traders said the move in the forward market reflects growing fears over India’s exposure to rising oil prices and geopolitical instability. India imports more than 85% of its crude oil requirements , making the economy highly sensitive to developments in West Asia. Brent crude prices climbed above USD 106 per barrel amid concerns surrounding the Strait of Hormuz , a critical global oil shipping route.

Analysts warned that sustained high oil prices could widen India’s current account deficit, raise inflation and increase pressure on the rupee. The currency has already weakened more than 6% since tensions involving Iran intensified.

The Reserve Bank of India (RBI) reportedly intervened aggressively by selling dollars through state-run banks to prevent panic depreciation. Despite the intervention, market sentiment remained fragile due to continued Foreign Institutional Investor (FII) selling. Foreign investors have withdrawn more than Rs 2 lakh crore from Indian equities in 2026, increasing dollar demand as funds move out of the country.

Indian equity markets also remained volatile. The Sensex and Nifty fluctuated sharply during the session as investors balanced hopes of easing geopolitical tensions against fears of inflation and slowing growth. Defensive sectors such as healthcare and pharma attracted buying, while oil-sensitive industries remained under pressure.

Stocks including Apollo Hospitals and Grasim Industries emerged among the top gainers, while Reliance Industries and select technology shares witnessed selling pressure. Analysts said domestic SIP and mutual fund inflows are currently cushioning markets from a sharper correction despite heavy FII outflows.

Market experts believe the spot rupee may not immediately touch 100 per dollar, but warned that prolonged crude prices above USD 110 and worsening geopolitical tensions could significantly weaken the currency further in the coming months.