Mumbai

The Indian rupee witnessed sharp volatility on Monday, breaching the 95-per-dollar mark during intra-day trade before recovering to close at 94.70 against the United States dollar, as escalating tensions involving Iran rattled global markets.

Forex traders attributed the turbulence to heightened geopolitical uncertainty in West Asia, which has fuelled risk aversion among investors and strengthened the dollar against emerging market currencies.

At the interbank foreign exchange market, the rupee opened strong at 93.62 and even touched 93.57 in early trade, supported by a recent move by the Reserve Bank of India (RBI) to tighten banks’ net open position limits. The RBI, through a circular dated March 27, capped the Net Open Position (NOP-INR) at USD 100 million, aimed at curbing speculative positions and stabilising the currency.

However, the initial gains proved short-lived. The rupee later plunged to an all-time intra-day low of 95.22 against the dollar before recovering partially to settle at 94.70, up 15 paise from its previous close of 94.85.

The session saw extreme volatility, with the USD/INR pair swinging nearly 165 paise, reflecting nervousness in global markets as the West Asia conflict entered its 31st day.

Market experts pointed to the strengthening of the dollar index and surging crude oil prices as key pressures on the rupee. Rising demand for safe-haven assets has kept the dollar firm, while escalating tensions have pushed up global oil benchmarks like Brent crude, intensifying concerns over India’s import bill.

“The global backdrop is driving this weakness. As hopes of de-escalation fade, investors move towards safer assets, strengthening the dollar and weakening currencies like the rupee,” said Amit Pabari, Managing Director of CR Forex Advisors.

On the domestic front, equity markets also came under heavy selling pressure. The Sensex plunged 1,635.67 points to close at 71,947.55, while the Nifty dropped 488.20 points to settle at 22,331.40. Foreign institutional investors (FIIs) offloaded equities worth Rs 11,163.06 crore on a net basis, adding to market stress.

Despite the volatility, Finance Minister Nirmala Sitharaman maintained that India’s economic fundamentals remain strong. She stated that compared to other emerging markets, the rupee is “absolutely going fine” against the dollar.

Meanwhile, Minister of State for Finance Pankaj Chaudhary reiterated that the rupee’s value is market-determined and influenced by multiple global and domestic factors. He added that both the government and the RBI are closely monitoring the situation.

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Since the beginning of the West Asia conflict on February 28, 2026, the rupee has depreciated by over 4 per cent, and nearly 10 per cent over the current fiscal year, underscoring the sustained pressure from global economic uncertainties.