Rupee sinks to fresh low, breaches 92/$ mark amid West Asia tensions

The Indian Rupee breached the psychological 92 mark, hitting a record low on Wednesday as a widening conflict in West Asia involving Iran drove oil prices sharply higher. 

 

The domestic currency opened 55 paise weaker at 92.03 against the greenback, a day after closing at the 91.47 mark. The currency has fallen by over 7 per cent this financial year. The local currency depreciated amid a broader flight to safe-haven assets and continued foreign outflows from domestic equities. 

 

Stock markets, along with currency, continue to see fallout after the US and Israel fired missiles across Iran last week, with the Supreme Leader Ayatollah Ali Khamenei being killed. Iran responded with strikes against Israel, as well as US bases and other targets in states including Saudi Arabia, Qatar, the United Arab Emirates (UAE), Kuwait and Bahrain. 

 

   

Brent crude oil prices rose above $82 a barrel after rallying about 12 per cent over two days, the biggest gain since 2020, according to Bloomberg. Trump said the US will provide insurance guarantees and naval escorts to ensure safe passage for vessels through the Strait of Hormuz. 

 

Analysts at JM Financial said that limited retaliation may lift oil prices by $5-10 per barrel, direct damage to Iranian oil infrastructure by $10–12, disruption in the Strait of Hormuz above $90, and a broader regional conflict beyond $100 per barrel. 

 

Trump, in a social media post, said “wars can be fought ‘forever’” and said the US had an unlimited supply of nuclear weapons and long-range missiles that the US wanted to prevent Iran from obtaining. 

 

This is a goldmine for exporters, who can now sell their cash and spot receivables above the 92 level, while importers may need to wait for dips to buy dollars, said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP. "We now await action from the Reserve Bank of India (RBI) on the rupee... The US dollar was the only preferred safe haven after the US attacks on Iran and the closure of the Strait of Hormuz due to its energy self-sufficiency."

 

Meanwhile, RBI said India’s current account deficit (CAD) widened to $13.2 billion, or 1.3 per cent of GDP, in the third quarter of 2025–26 (October–December). The deficit stood at $11.3 billion, or 1.1 per cent of GDP, in the corresponding quarter of 2024-25.  ========== 

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