Rupee hits fresh record low as Iran war, oil shock deepen pressure on Indian economy – Firstpost

The Indian rupee slid to a fresh all-time low on Monday as surging crude oil prices and rising global bond yields rattled financial markets, amplifying concerns over the economic fallout of the Iran war for the world’s third-largest oil importer.

The rupee weakened to 96.18 against the US dollar, down 0.2 per cent on the day, breaching its previous record low of 96.1350. The fall marked the fifth straight trading session in which the currency touched a new lifetime low.

The sharp decline comes amid mounting worries over India’s widening import bill and inflation risks as crude oil prices remain elevated following escalating tensions in West Asia. Brent crude rose to around $112 a barrel on Monday after a drone attack on a nuclear power plant in the United Arab Emirates intensified fears of supply disruptions in the region.

Investor sentiment was further shaken after US President Donald Trump warned that
“the clock is ticking” for Iran, signalling that diplomatic efforts to contain the conflict had made little progress.

The rupee has emerged as Asia’s worst-performing currency so far in 2026 and has weakened about 5.5 per cent since the Iran war erupted on February 28.

Analysts said rising oil prices are placing enormous pressure on India’s external balances because the country imports more than 80 per cent of its crude oil requirements. A sustained spike in energy prices could widen the current account deficit, fuel imported inflation and complicate the Reserve Bank of India’s efforts to support growth while keeping prices under control.

The weakening rupee also reflects broader risk aversion in global markets, with investors moving away from emerging market assets amid fears of prolonged geopolitical instability and higher interest rates worldwide.

Global bond yields climbed sharply as investors reassessed inflation risks linked to soaring energy prices, reducing appetite for riskier assets. The move triggered fresh selling across Asian equities and currencies.

Indian equity markets also came under heavy pressure on Monday. The benchmark BSE Sensex plunged
more than 800 points in opening trade, while the NSE Nifty 50 fell over 1 per cent, weighed down by losses in banking, metal and auto stocks.

Foreign portfolio investors have remained persistent sellers of Indian equities this year, offloading more than $23 billion worth of stocks so far in 2026, already surpassing the record annual outflows seen in 2025.

Market participants said the rupee’s trajectory in the near term will largely depend on crude oil prices, geopolitical developments in West Asia and the Reserve Bank of India’s intervention strategy.

Traders will also closely monitor any signs of escalation in the Iran conflict, which could further disrupt global energy supplies and increase volatility across emerging markets, including India.