The US-Israel joint attacks on Iran had its ripple impact on the rupee, which weakened below 91 to the dollar and touched a one-month low on Monday.
The Indian unit was weighed down by FPI selling in the equity markets amid risk-off sentiment setting in, prompting investors to invest in safe-haven assets such as US Treasuries and gold, and hardening global crude oil and gold prices.
Opening weaker at 91.25 per dollar (down 28 paise compared with previous close of 90.97), the rupee tested intraday high/low of 91.2150/91.4900. It closed at 91.49 per dollar, down 52 paise versus the previous close. The RBI is believed to have intervened in the forex market to prevent further slide in the rupee.
Amit Pabari, MD, CR Forex Advisors, said: “It was a high-tension day for the rupee. The currency opened weak as markets digested weekend geopolitical developments and closed at 91.49, marking a 0.25 per cent decline — the sharpest single-day fall since early February.
“The pressure came from multiple fronts— oil prices surged nearly 7 per cent, equity markets saw net selling of ₹7,314 crore with Sensex down 1,048 points and Nifty off 312 points, while the DXY touched 98.50, strengthening the dollar globally. Despite this, the rupee managed to hold below 91.50, suggesting some stabilizing presence in the market.”
Pabari observed that it appears the Reserve Bank of India (RBI) have intervened selectively. According to the latest RBI data, India’s forex reserves stood at $723.60 billion as of 20 February, providing nearly 11 months of import cover and giving the RBI firepower to manage volatility.
“The RBI seems to be allowing the rupee to adjust in line with its Asian peers while preventing a disorderly move toward 92.00. Its focus remains on smoothing volatility rather than defending a fixed level. In the near term, the rupee’s direction will remain closely linked to global market sentiment, particularly geopolitical developments and capital flows.
“While the RBI is likely to monitor sharp currency movements and intervene when necessary, currency stability will also depend on how long these global uncertainties persist,” he said.
Sharp pressure
Abhishek Goenka, Founder & CEO, IFA Global, noted that the rupee came under sharp pressure, breaching the ₹91 per dollar mark and touching a one-month low, as escalating Middle-East tensions triggered a broad risk-off move globally.
“Concerns around potential disruption in the Strait of Hormuz pushed crude oil prices sharply higher, strengthening the dollar and weighing on oil-import-dependent currencies like the rupee. The currency weakened about 0.5 per cent intraday before stabilising in the ₹91.4–₹91.5 range.
“The move was primarily driven by the surge in crude prices and safe-haven dollar demand, both of which materially worsen India’s near-term external balance and inflation outlook,” he said.
Goenka underscored that the pressure was visible across Asian currencies, with market participants cutting risk exposure and increasing hedges amid geopolitical uncertainty. Positioning remained defensive, compounded by caution ahead of local market closures and elevated volatility in global markets.
He said the RBI appears to have intervened through State-run banks and forward markets to smooth volatility rather than defend a specific level, which helped prevent a sharper slide. In the near term, the rupee is likely to remain sensitive to crude price movements and geopolitical developments, with RBI actions expected to focus on containing disorderly moves while allowing market-driven price discovery.
Published on March 2, 2026
