The rupee hit a record low of 93.98 against the USD on worries of an escalating war in the Middle East

The Indian rupee hit a record low on Monday as concerns that the conflict in the Middle East could cause prolonged energy supply disruptions, posing a threat to Asia’s third-largest economy, dragged down Indian assets.

The rupee tumbled to 93.98 against the US dollar, eclipsing its previous low of 93.7350 on Friday.

It crossed the 94-per-dollar mark on the Interbank Order Matching System after the local ⁠spot trading session ended at 3:30 pm IST.

The South Asian currency has fallen about 3% since the Iran war began on February 28, hurt by a more than 50% jump in oil prices and severe gas supply disruptions. Analysts believe there could be more pain for the rupee and its Asian peers if the war drags on.

Asian currencies were down between 0.1% and 0.8% on Monday as hopes of an off-ramp to hostilities over the weekend faded while the dollar index rose 0.3% to 99.9, benefiting from safe-haven demand.

An “all-selling mood” in markets is affecting equities, bonds and precious metals, ING said in a note. “This is an ideal environment for the dollar, especially against high beta currencies.”

India’s benchmark equity index Nifty 50 fell more than 2% on Monday, while the yield on the benchmark 10-year note rose 10 basis points to 6.847%.

Foreign investors pulled more than $11 billion from Indian stocks and bonds in March, with the month on track for the heaviest monthly outflow since October 2024, putting further pressure on the local currency.

Despite multiple headwinds, the rupee has held up better than some of its peers during the crisis, helped by frequent interventions by the Reserve Bank of India.

While the rupee has fallen ⁠3% since the start of the Iran war, peers such as the Korean won and the Thai baht are down 5% and nearly 6% respectively.

On Monday, traders said the central bank’s presence in the market was light and likely concentrated in the non-distributed forward market.

Looking ahead, investors are focusing on the deadline set by US President Donald Trump. Trump has threatened to hit Iran’s electricity grid if the Strait of Hormuz is not reopened by about 2344 GMT on Monday.