MUMBAI: The rupee plunged 50 paise to 92.32 against the US dollar in early trade on Monday as equities market bled 2% after crude prices soared by almost 28%.
A steep surge in pullout of foreign investment and sudden crash across domestic equity markets, which has already lost more than 5.5% since the war began, has put further pressure on the rupee which has been the worst Asian unit since 2025, traders said.
The rupee plunged to a new low, retesting its all-time intra-day low of 92.32 against the USD on March 4, 2026. Currencies across the globe have been critically hit by soaring crude prices, marking the biggest single-day rally in 40 years, on course to cross the sensitive USD 120 a barrel mark.
This is the first time since the Russian invasion of Ukraine that oil price has crossed the USD 100 a barrel-mark and takes the overall rally since the Iran war began to a full 53%.
Brent crude, the global oil benchmark, was trading higher by a staggering 27.7% at USD 117.5 a barrel in futures trade as the war between US-Israel and Iran intensified, while the US crude (West Texas Intermediate) was a tad higher at over USD 118—another first in recent history. The close to 28% rally today is the steepest single-day surge in at least 40 years and comes on the back of a 25% rally in a week since the war began.
At the interbank foreign exchange, the rupee opened at 92.22 before declining further to 92.32, down 50 paise from its previous close. The rupee had lost 18 paise on Friday to close at 91.82.
"The rupee will remain vulnerable to the rising oil prices which have risen by over 28% since the last closure on Friday, taking the rally since the war to close to 53%. Other Asian currencies are not spared either," said Anil Kumar Bhansali of Finrex Treasury Advisors, adding that the rupee may test 93 if oil remains above USD 100 in the coming sessions.
A weekend note by DSP Mutual Fund warned that if crude goes past USD 120 a barrel and the country continues importing at that level through FY27, the oil trade deficit could climb to USD 220 billion, pushing the current account deficit above 3.1% of GDP.
Current account deficit of this kind can lead to significant currency depreciation, heightened inflation and a liquidity crunch, the fund house warned.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.66% higher at 99.64.
Foreign investors have been dumping domestic equities like hot coal, adding to the pain of the bleeding rupee more, which has already lost 3% YTD on the back of a 4.9% plunge in 2025. Last year, foreign investors pulled out USD 18.9 billion from secondary markets, and the trend continues this year as close to USD 6 billion has been withdrawn YTD.
Foreign institutional investors sold equities worth Rs 6,030.38 crore on a net basis on Friday, according to exchange data.
Foreign investors had pulled out a whopping Rs 21,000 crore (around USD 2.3 billion) from equities over the past four trading sessions alone. The latest sell-off comes after they infused Rs 22,615 crore into equities in February, the highest monthly inflow in 17 months.
Prior to that, they had been net sellers for three consecutive months. They withdrew Rs 35,962 crore in January, Rs 22,611 crore in December, and Rs 3,765 crore in November, according to data from the depositories. The latest outflows occurred during March 2-6, when they sold equities worth about Rs 21,000 crore in the cash market.