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The Indian rupee, already under pressure from escalating geopolitical tensions in the Middle East, could weaken further if the Iran-related conflict persists and crude oil prices stay elevated, analysts and market forecasts suggest, with several scenarios pointing to deeper depreciation against the US dollar.
“Higher oil prices widen India’s import bill and current account concerns, leading to defensive positioning in the rupee. The positive momentum seen post-budget and after the US–India trade understanding has temporarily faded under global risk-off sentiment. Technically, rupee is expected to remain volatile within the 91.00–92.00 range in the near term, with crude price action and geopolitical developments being the key drivers,” Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
The forecasts
Analysts note that if crude rises toward $90–$100 a barrel, the rupee could weaken beyond 93 against the dollar amid prolonged conflict.
FX strategists say near-term depreciation of 1–2 % is possible if risk aversion and high oil prices persist, potentially nudging the rupee into the Rs 92–₹93 range in coming weeks. Some analysts warn of deeper weakness, Rs 94.80 or below, in a scenario where the conflict intensifies and crude prices stay elevated for an extended period.
These projections assume continued geopolitical escalation and sustained investor flight toward safe-haven assets like the US dollar, which typically strengthens during periods of global uncertainty and further weighs on emerging-market currencies including the rupee.
The currency has recently breached key psychological levels, weakening past Rs 91 to the dollar and hitting around Rs 91.48 on March 2, 2026, its lowest in a month amid rising crude prices and risk-off sentiment in global markets.
The conflict’s impact on oil markets is central to rupee outlooks. Brent crude prices have surged toward $82 per barrel as tensions flared following military action involving Iran, the US and Israel, prompting traders to price in a sustained conflict risk premium.
Role of RBI and macro buffers
Despite these downside risks, several economists emphasise that India’s large foreign exchange reserves and prudent macroeconomic policy provide some buffer against extreme currency dislocations. The Reserve Bank of India (RBI) has intermittently intervened in the foreign exchange market to smooth excessive volatility, and such interventions are likely to continue if the rupee approaches levels deemed disruptive to economic stability.
Prolonged weakness in the rupee could feed into imported inflation, especially through fuel and commodity prices, complicating inflation control and monetary policy. Higher oil and import costs may widen the current account deficit and dampen growth prospects, with spillovers to investor sentiment and capital flows.
While short-term volatility could see the rupee probe levels in the Rs 92–Rs 94 per dollar range, more severe geopolitical escalation and sustained high oil prices could push the currency lower in extended scenarios. Central bank intervention and evolving conflict dynamics will remain key determinants of how far and how fast the rupee’s slide continues.
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