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

The Indian rupee, already Asia’s worst performing currency in FY26, lost 50 paise on Monday as Iranian attacks on major West Asian energy assets caused crude oil prices to rise by around 10% despite pledges from major global exporters to modestly increase production.The rupee closed below 91 to the dollar for the first time in a month – at 91.48 – after financial assets across Asia were hit by an alarming escalation in the US-Iran conflict. The U.S. dollar strengthened and precious metals were expected to rise on the appeal of safe havens after Tehran blocked a narrow strait in the Persian Gulf that carries oil pumped from wells on either side of the highly militarized water margin.

The rupee, which has lost 6.4% against the US dollar so far in FY26, closed at 90.98/$1 on Friday (Feb 27), while government bond yields remained relatively unchanged.The rupee could weaken further if the conflict continues, although traders expect bigger interventions from the central bank beyond 91.75 per dollar.

“The currency is expected to fall further and I expect the rupee to trade between 91.25/$1 and 91.75/$1 on Wednesday after a holiday,” said Anil Bhansali, head of finance at Finrex Treasury Advisors.

India’s financial markets are closed on Tuesday for Holi.

The currency hit its record low of 91.98/$1 on January 31, and experts believe that interventions by the Reserve Bank of India (RBI) would be aimed at protecting this line.

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

On Monday, the RBI dipped into its stockpile and sold dollars in the offshore, non-deliverable forwards (NDF) market and onshore spot market during early trading hours, traders said. However, Mint Road’s intervention was quite muted, she added.

“Everyone expected the 91/$1 level to be breached today (Monday), a level that was protected for over a week. So some position hedging took place,” said Dilip Parmar, currency research analyst at HDFC Securities. “In general, traders were cautious and avoided large positions that would be taken once volatility had subsided.”

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 hurting inflation in India as imports account for nearly four-fifths of the country’s motor fuel consumption. There were reports that a factory owned by Saudi Aramco, the world’s largest energy company by market value, was hit by Iranian retaliatory attacks.

“Traders want their positions to be covered and have avoided taking unnecessary risks today because no one knows how the situation would develop,” said a trader at a state-owned bank.

Indian shares lost over a percentage point on Monday as foreign portfolio investors (FPI) sold net shares worth Rs 3,295.6 crore.

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

Yields opened at 6.68% on Monday and fell gently throughout the day.

The auction of government bonds at market expected yields also supported government bond yields, traders said.