Rupee ends at 91.48/$1, worst day in a month amid US-Israel and Iran war

The Indian rupee, already Asia’s worst-performing currency in FY26, fell 50 paise on Monday as crude oil prices jumped nearly 10% despite assurances of modest output increases by major global exporters due to Iranian attacks on key energy assets in West Asia.

The rupee closed below the 91 dollar mark for the first time in a month – at 91.48 – as a worrying escalation in the US-Iran conflict hurt financial assets across Asia. The U.S. dollar strengthened and precious metals rose in anticipation on safe-haven appeal after Tehran blockaded the narrow Persian Gulf strait that drains oil pumped by wells on either side of the highly militarized water margin.

The rupee, which has depreciated 6.4% against the US dollar so far in FY26, closed at 90.98/$1 on Friday (27 February), while sovereign bond yields remained relatively flat.

The rupee could weaken further if the conflict continues, although traders expect the central bank to intervene above 91.75 against the dollar.

“The currency is expected to depreciate further, and I expect the rupee to trade between 91.25/$1 and 91.75/$1 on Wednesday after Tuesday’s holiday,” said Anil Bhansali, Treasury Head, Finrex Treasury Advisors.

Indian financial markets are closed on Tuesday due to Holi.

The currency hit a record low of 91.98/$1 on January 31 and experts believe the Reserve Bank of India’s (RBI) intervention will be aimed at protecting that mark.

A continental current

Asian currencies also fell in a range of 0.3% to 1.3% against the US monetary unit, while the dollar index rose to 98.4 from 97.6 the previous day.

On Monday, the RBI reduced its stockpiles and sold dollars in the offshore, non-deliverable forwards (NDF) market and the onshore spot market during the opening hours of trade, traders said. However, Mint Road’s intervention was muted, they added.

“Everybody expected the 91/$1 level to be broken today (Monday), a level that was protected for more than a week. So, it happened,” said Dilip Parmar, currency research analyst at HDFC Securities.

Brent crude oil traded above $80 a barrel, rising nearly 10% at one point and putting pressure on the currency. A rise in crude oil prices is detrimental to inflation in India as imports account for nearly four-fifths of the country’s motor-fuel consumption. There were reports that a facility of Saudi Aramco, the world’s largest energy company by market valuation, was hit by an Iranian counterattack.

“Traders want to cover their positions and avoided taking any unnecessary risk today as nobody knows how the situation will unfold,” said a trader at a state-run bank.

Indian stocks fell by more than a percentage point on Monday, while foreign portfolio investors (FPIs) added Rs. 3,295.6 crores of shares were sold net.

Meanwhile, the yield on the benchmark 10-year bond was largely unchanged, closing at 6.67% against its previous close of 6.66%.

Yields opened at 6.68% on Monday and eased cautiously throughout the day.

Auctions of government bonds at market-expected yields also supported sovereign bond yields, traders said.