A man counts Indian currency notes at a roadside currency exchange stall in the old quarters of Delhi, India, February 2, 2026. REUTERS
MUMBAI, Mar 4 (Reuters) – The Indian rupee is set to weaken past 92 per dollar at a lifetime low on Wednesday as the U.S.-Israeli war on Iran sent oil prices soaring, lifting demand for the safe-haven dollar, and fuelling risk aversion.
The 1-month non-deliverable forward indicated the rupee will open in the 92.10-92.20 range versus the U.S. dollar, having settled at 91.47 on Monday. Indian financial markets were closed on Tuesday for a holiday.
The rupee’s previous all-time low of 91.9875 was hit in January.
Brent Crude rose more than 1% to $82.32 on Wednesday, extending a rally of over 11% across the previous two sessions. It had climbed past $85 on Tuesday for the first time in nearly two years.
Oil markets have been rattled by fears that the widening Middle East war could disrupt flows through the Strait of Hormuz, a vital shipping route that carries roughly a fifth of world oil and LNG supplies.
The oil price rally poses a significant challenge for India, which imports more than 80% of its crude requirement.
Higher prices inflate the country’s import bill, widen the current account deficit, push up inflation, and increase dollar demand from oil refiners, all of which pile pressure on the rupee.
“Our calculations show that every $10 barrel move in oil prices can raise the current account deficit by 0.35% of GDP, with the impact on inflation (20-30 basis points) contingent on the extent of pass-through to the retail prices,” DBS Bank said in a note.
Supply-driven rise in oil prices tends to dampen risk appetite, often prompting foreign investors to pull funds from emerging-market equities. For India, where sentiment in equities was already fragile, such outflows are likely to put pressure on the rupee.
Foreign investors took out more than $350 million from Indian equities on Monday.
DOLLAR RALLIES, EQUITIES SLUMP
The dollar index rose to a three-month high, supported by a weaker euro and risk-off sentiment. U.S. equity futures extended Tuesday’s losses, while Indian equities were set to open nearly 2% lower.
Reporting by Nimesh Vora; Editing by Rashmi Aich
