Indian Rupee and Bonds Under Pressure as Middle East War Enters Fourth Week

The Indian rupee plunged to an all-time low of 93.94 per dollar as the Iran war drives crude oil prices above $112. RBI intervention is expected as bond yields surge.

By: AXL Media

Published: Mar 23, 2026, 6:08 AM EDT

Source: Reuters

Rupee in "Free Fall" Amid Energy Shock

The primary driver of the rupee's decline is the skyrocketing cost of crude oil, which is a critical import for India. With the Strait of Hormuz effectively closed and a 48-hour ultimatum from U.S. President Donald Trump looming, global energy markets are in a state of alarm.

Exchange Rate: The rupee opened at 93.84 on Monday before sliding to 93.94, a significant drop from Friday's settle of 93.53.

Oil Impact: Brent crude is currently trading around $112.90 per barrel, up more than 50% this month. Analysts estimate that India is paying an additional $50 for every barrel of crude imported from the Gulf compared to pre-war prices.

Central Bank Action: Traders report that the Reserve Bank of India (RBI) has been present at various levels to provide liquidity, though it appears to be allowing a gradual depreciation rather than defending a specific hard peg given the overwhelming demand for dollars from oil importers and foreign portfolio investors (FPIs).

Bond Markets and Yield Surges