The Indian rupee tumbled to a record low of roughly 96.9 against the US dollar on Wednesday.
Global asset managers are warning that a slide toward 100 per dollar has become a possible scenario.
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Rupee Crashes to 96.9 Record Low as Iran War Hits Indian Currency
Wednesday’s drop extended the rupee’s losing streak to a 8th straight session. The currency has now lost about 6% since late February, when it traded near 87 per dollar. Cumulative losses since 2009 exceed 50%.
Surging crude oil prices, a stalemated US-Iran war, and surging bond yields are driving the slide. Furthermore, BeInCrypto reported that foreign portfolio investors have withdrawn more than $22 billion from Indian stocks this year.
According to Bloomberg, firms including Aberdeen Investments, MetLife Investment Management, and Gamma Asset Management SA expect the rupee to weaken further if the standoff drags on.
“The rupee remains vulnerable to further depreciation, and 100 against the dollar is an important psychological threshold that investors will increasingly focus on,” Rajeev De Mello, global macro portfolio manager at Gamma Asset, said. “The most immediate catalyst for a break of the level would be another leg higher in oil prices.”
A prolonged stalemate inflates India’s oil import bill and pushes investors toward the safer greenback. That deepens the rupee’s conversion pressure.
Meanwhile, Citi economists led by Samiran Chakraborty expect New Delhi to take fresh steps, including possible curbs on outward business investment.
The government has already hiked fuel prices and raised gold import duties to slow dollar outflows. Prime Minister Narendra Modi has urged citizens to conserve fuel and avoid non-essential foreign travel.
With the Strait of Hormuz still effectively shut and US Treasury yields elevated, the rupee may find little near-term relief. Only a diplomatic breakthrough or a Federal Reserve pivot is likely to reset the dollar’s trajectory.
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