Home / Business and Economy / INR Plunges: West Asia Conflict Fuels Rupee's Record Lows
INR Plunges: West Asia Conflict Fuels Rupee's Record Lows
8 Apr
Summary
- Indian Rupee hit record lows due to West Asia conflict.
- RBI introduced curbs on open positions on March 27, 2026.
- INR depreciated 6.2% against USD in H2, yet remained stable.
The Indian Rupee (INR) faced significant depreciation pressures in the latter half of the fiscal year, reaching historic lows against the US dollar amidst escalating concerns over the West Asia conflict. Following a brief period of appreciation in early February 2026, attributed to an interim India-US trade agreement, the INR reversed course in March as geopolitical tensions intensified. The Reserve Bank of India (RBI) reported persistent Foreign Portfolio Investor (FPI) outflows, elevated corporate dollar demand, and increased global risk-off sentiment as key drivers of the INR's depreciating bias.
By March 2026, depreciation pressures heightened, with the INR intraday surpassing the ₹95 per US dollar mark, its previous record low, driven by West Asia conflict concerns. To ensure market stability, the RBI implemented a prudential measure on March 27, 2026. This measure capped the net open position in INR for authorized dealers at US$ 100 million daily, aiming to curb speculative positioning and mitigate systemic risks.
Despite a notable depreciation of 6.2 per cent against the US dollar in H2, the INR demonstrated resilience, remaining among the least volatile emerging market currencies during this period. This stability was supported by a modest current account deficit and robust foreign exchange reserves. Considering global market volatility, the RBI revised its baseline exchange rate assumption to ₹94 per US dollar for the coming period, up from ₹88 previously.
