MUMBAI (Diya TV) — The Indian rupee closed out a turbulent fiscal year at record lows, reflecting mounting global and domestic pressures on Asia’s third-largest economy. The currency briefly slipped past the 95-per-dollar mark on Monday, its weakest level ever, before recovering slightly with support from the central bank.
The rupee showed sharp swings during Monday’s trading session. It opened strong at 93.59 per U.S. dollar but quickly reversed course. The currency plunged to a record low of 95.21 before closing at 94.83.
Traders described the moves as unpredictable and difficult to manage. Many said the volatility increased after the Reserve Bank of India unexpectedly capped foreign exchange positions. The move aimed to stabilize the currency but forced traders to unwind positions quickly, leading to losses. Market participants believe the central bank likely intervened when the rupee crossed 95. That intervention helped limit further losses.
The rupee declined about 11% during India’s fiscal year, which runs from April to March. This marks its steepest annual drop since 2011-12. Several factors contributed to the sharp fall. Persistent foreign investor outflows weighed heavily on the currency. Overseas investors sold more than $19 billion worth of Indian equities over the past year. Investor sentiment weakened further in March. Rising global uncertainties and higher oil prices triggered a record pace of monthly outflows.
Global developments played a major role in weakening the rupee. Policies from U.S. President Donald Trump created uncertainty in financial markets. Trade tensions and shifting geopolitical alliances added to investor caution.
At the same time, escalating conflict in the Middle East pushed oil prices higher. Brent crude surged to around $115 per barrel. The spike followed attacks by Yemeni Houthis on Israel, raising fears of a broader regional conflict. India, a major oil importer, remains highly sensitive to rising crude prices. Higher oil costs increase the country’s import bill and widen its current account deficit. This puts additional downward pressure on the rupee.
The Reserve Bank of India’s recent actions may provide short-term stability, but analysts remain cautious. Experts at Barclays said the central bank’s measures do not address the root causes of the currency’s weakness.
They noted that India’s balance of payments could deteriorate further. Rising oil prices and continued capital outflows may deepen financial pressures. As a result, the rupee may remain vulnerable in the coming months. Analysts also warned that any disruption in global oil supply could trigger another sharp decline in the currency.
India’s financial markets mirrored the currency’s struggles. The benchmark Nifty 50 fell about 11% in March, marking its steepest monthly decline since the COVID-19 market crash in 2020.
Bond markets also showed signs of stress. The yield on India’s 10-year government bond rose above 7% for the first time in nearly two years. Rising yields indicate increased borrowing costs and reduced investor confidence. Global markets also weakened as investors braced for prolonged geopolitical tensions. Many fear that a wider conflict could drive inflation higher and slow economic growth worldwide.
Despite the sharp decline, the rupee has performed moderately compared to other Asian currencies. Central bank interventions and policy measures have helped limit extreme volatility. However, experts say risks remain tilted to the downside. Continued foreign outflows, high oil prices, and global uncertainty could keep the rupee under pressure.
