Driven by the escalating conflict in the Middle East and subsequent volatility in global energy markets, the Indian Rupee (INR) plummeted to an all-time low against the US Dollar on Monday (March 30).

During interbank trading, the rupee breached the psychological barrier of 95, touching a record low of 95.22 per dollar.

Intraday Volatility
The currency showed brief signs of resilience early in the session, opening at 93.62 and marginally strengthening to 93.57. However, this momentum quickly evaporated as a sharp sell-off ensued.

The final slide to 95.22 follows a turbulent previous session on Friday, where the rupee had already dropped 89 paise to close at what was then a record low of 94.85.

Key Drivers of the Depreciation
Market analysts point to a "triple threat" weighing down the Indian currency:

Surging Oil Prices: Brent crude has climbed to nearly $115 per barrel due to fears of supply disruptions in the Middle East. As a major oil importer, India’s trade deficit widens with every price hike, putting immense pressure on the rupee.

Safe-Haven Demand: Geopolitical tensions have driven investors toward the US Dollar. The Dollar Index remains positioned above 100, making a rupee recovery increasingly difficult.

Foreign Capital Outflow: Foreign institutional investors are aggressively pulling capital out of Indian equities, seeking more stable markets amid the global crisis.

Impact on the Stock Market
The currency crash sent shockwaves through Dalal Street. On Monday:

• The Sensex tanked by approximately 1,700 points.
• The Nifty dropped by over 500 points.

Outlook
Experts warn that unless international tensions de-escalate and oil prices stabilize, the rupee remains vulnerable to further depreciation.

There are growing concerns that the currency could weaken even more in the coming weeks if the US-led military operations in the Middle East intensify.
Source: NDTV