4 min readNew DelhiUpdated: Mar 20, 2026 11:22 AM ISTThe rupee crossed the 92-per-dollar mark just earlier this month in March and had gone past the 90- and 91-per-dollar in December. (File Photo)The Indian rupee broke past the 93-per-dollar mark for the first time on Friday as the escalation of the conflict in West Asia fueled a rise in global fuel prices. The currency’s exchange rate hit a new all-time low of 93.28-per-dollar in early trade.While the rupee weakened significantly in 2025 on the back of sustained foreign capital outflows from domestic financial markets, Israel and the US attacking Iran and the latter’s subsequent retaliation, including the closure of the key waterway of Strait of Hormuz which is a crucial route for ships transporting fuel, has sparked a rout in the Indian foreign exchange market.The domestic forex market was closed for trading on Thursday on account of Gudhi Padwa. However, the rupee had crossed the 93-per-dollar mark in off-shore markets as fuel prices jumped following Israel’s attack on South Pars, the world’s largest natural gas field located in the Persian Gulf and shared between Iran and Qatar. Iran responded by hitting Qatar’s Ras Laffan Industrial City, the world’s biggest liquefied natural gas (LNG) facility. News agency Reuters reported, quoting the chief executive of QatarEnergy, that Iran’s attacks had wiped out 17% of Qatar’s LNG export capacity, threatening global supplies.The rupee’s reaction on Friday, as such, was largely expected given that it had not traded on Thursday. Foreign investors have been spooked by the war and its impact on fuel prices and have pulled out $9.83 billion from Indian financial markets – equity and debt – so far in March. This is the most since they withdrew a net $11.47 billion worth of Indian shares and bonds in October 2024 – the month just before the US Presidential elections, that saw Donald Trump being re-elected for a second term to the White House, were held.The rupee crossed the 92-per-dollar mark just earlier this month in March and had gone past the 90- and 91-per-dollar in December. So far in 2026, the rupee has fallen by 3.6% against the US dollar. Since the war began on February 28, it has weakened by 2.4%. The Reserve Bank of India (RBI) has tried to stem the rot by intervening in the foreign exchange market and selling foreign currency – its foreign exchange reserves were down $11.68 billion on March 7 – the biggest weekly fall since November 2024.The sharp rise in crude oil prices, the resultant weakening of the rupee, and the impact on growth and inflation is set to complicate the RBI’s interest rate decision early next month. The central bank, which lowered the policy repo rate by 125 basis points (bps) in 2025, had in October 2025 assumed that the price of India’s crude oil basket would average $70 per barrel in the second half of 2025-26. However, after staying below $70 per barrel from October 2025 to February 2026, the average price of the basket has shot up to $114.08 per barrel this month, according to data from the Ministry of Petroleum and Natural Gas’s Petroleum Planning & Analysis Cell.The RBI, whose Monetary Policy Committee will announce its decision at 10am on April 8, had also assumed that the rupee’s exchange rate will average 88-per-dollar in the second half of the fiscal.Story continues below this adAt a time of global uncertainty, investors tend to cut down on the risks they are exposed to and withdraw from emerging markets, such as India. Staying invested in a foreign asset where the currency is weakening can hurt returns for foreign investors in terms of their own currency, such as the US dollar. However, the exit of foreign capital exerts further pressure on the rupee and it depreciates further.Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More © The Indian Express Pvt LtdTags:Indian rupee