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Informist, Thursday, Mar. 5, 2026

 

By Kabir Sharma

 

MUMBAI – Akin to the conflicts around the globe, the rupee finds itself in the midst of a tussle in March after a relatively good February, when the Indian unit had appreciated against the dollar. The rupee has struggled to find a footing in the first week of March as the attack by the US and Israel on Iran triggered a conflict that dampened risk sentiment globally.  

 

As persistent dollar demand and the military conflict in West Asia continue to exert pressure on the local currency, the rupee is expected to weaken further and end March around 92.00 per dollar, according to the median of 13 respondents from banks and brokerages polled by Informist. The rupee ended February at 90.9750 a dollar, up over 1% from January, supported by clarity around the India-US trade deal in the first week of the month. 

 

Market participants said they expect the size and timing of intervention by the Reserve Bank of India to dictate the direction of the currency in March. "India's central bank recently reverted to a strategy it has used before to support the rupee, forcefully intervening before the local spot market opens to lift the Indian rupee after it slipped to an all-time low amid a surge in crude prices," Globe Capital said in a note. It said it expects the RBI to continue to use this strategy to curb excess volatility.  

 

HDFC Securities, which expects the rupee to fall to 92.50 a dollar at the end of the month, said geopolitical uncertainty remains one of the main reasons for volatility in the currency market. Escalating hostilities in West Asia have already pushed crude oil prices higher and triggered risk-averse flows into the dollar globally, which are weighing on emerging market currencies, including the rupee, it said.  

 

The conflict has also raised fears of disruption in the Strait of Hormuz, a critical route for global energy shipments. Any interruption to oil flows through the strait could significantly tighten global supply and drive crude prices higher, posing risks for India's import-dependent economy. 

 

"Rupee's movement will depend largely on the depth and duration of the West Asia conflict," said V.R.C. Reddy, head of treasury, Karur Vysya Bank. "India's strong economic linkages with the Gulf region through crude imports, merchandise exports, and a large workforce make it vulnerable to prolonged uncertainty."

 

Market participants said sustained escalation of the US-Iran conflict could put additional downward pressure on the rupee through multiple channels. Higher oil prices would increase India's import bill and widen the current account deficit, while geopolitical uncertainty typically drives investors toward safe-haven assets such as the US dollar, which will likely dampen investment inflows into India. Economists said the trajectory of global crude oil prices will remain a crucial factor for the currency. If oil prices remain above levels assumed in the government's budget, India's current account deficit could widen as the import bill rises. This will also put margins of oil refining companies under pressure as they are unable to raise pump prices.

 

Market participants also highlighted the role of positioning linked to the central bank. The short dollar position of the RBI in the forwards market rose to around $68 billion in January, suggesting the central bank has been managing the rupee through intervention in derivatives markets as well, rather than relying solely on aggressive intervention in the spot market.

 

Foreign portfolio investors have also been large sellers in Indian financial markets, dealers said. Persistent outflows from both the equity and debt markets have added to dollar demand in the domestic currency market and these are expected to remain an important driver of the rupee's direction in the near term, market participants said. Foreign portfolio investors have net sold equities to the tune of around $1.3 billion in March so far, compared with net purchases of $1.6 billion in February. In the worst of scenarios, in which the conflict continues for the whole month, the rupee is expected to fall to a new record low of 93 per dollar, dealers said. 

 

Against this backdrop of strong dollar demand, portfolio outflows, and global risks, most analysts expect the rupee to remain under pressure in the near term, with gradual depreciation likely as the central bank manages volatility rather than defending a specific level. Dealers said the balance between importer demand, capital flows, and central bank intervention will determine whether the rupee moves toward the 92-per-dollar level by the end of March, as currently expected by market participants.

 

POLL DETAILS

 

Participant	Mar-end	Jun-end
Finrex Treasury Advisors LLP	91.75	92.50
Globe Capital Market	90.50-93.50	89.00-93.70
HDFC Bank	91.00-93.00	-
HDFC Securities	92.50	93.00
ICBC India	92.25-92.50	-
ICICI Bank	91.00	90.00-92.00
IDFC FIRST Bank	93.00	-
Karur Vysya Bank	91.80-92.00	-
Mecklai Financial Services	92.00	91.25
Nuvama Wealth Management	91.40	93.80
Private bank	92.00-93.00	-
Bank of Baroda	91.00-92.00	-
Large state-owned oil co	92.50	-
Median	92.00	92.75

 

End

 

US$1 = INR 91.60

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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