The rupee has slipped to a record low :)
1 US Dollar = 94.01 Indian Rupee (as on 23/03/26)
Y’all know this didn’t happen overnight. INR has been weakening over the past few months. But the latest drop happened because of the ongoing US-Israel-Iran conflicts. Mostly because of the rising crude oil prices. Brent crude is hovering between $105-113 per barrel amid Middle East tensions (‘cause of the Strait of Hormuz closure), increasing India’s import bill. At the same time, the US dollar has strengthened and foreign investors (FPIs) have been pulling money out of Indian markets. In March alone, FPIs have been net sellers in equities. They’ve pulled out ~₹88,000 crore from Indian equities. When everyone wants dollars and no one wants rupees, the price of the dollar goes up. Simple math, but sadly, tough reality. To understand the current ₹94 value, you have to realise the rupee has always been a “slow slider.” Look at this timeline for context: INR pre independence The rupee wasn’t freely traded like today. It was linked to the British pound sterling, not the dollar. So there was no real INR-USD market rate yet. And $1 = ₹1 was a myth. We were tied to the British pound, and the math was closer to $1 = ₹3.30. We had zero external debt. INR in 1947-1966 Post-independence, India followed a fixed exchange system. Wars in ‘62 and ‘65, and low exports due to droughts, started draining our reserves and building pressure. INR in 1966 The first big reset. Rupee devalued by 57% to boost exports and get IMF support, just to survive. $1 went from ~₹4.76 to ₹7.50. INR in 1970s-1980s The slow decline phase. No sudden shocks, but the gold standard globally ended. Currencies started floating. Persistent issues like oil imports, inflation, and low productivity kept weakening the rupee. INR in 1991 Major turning point. Balance of payments crisis. India had barely enough reserves to cover a few weeks of imports. And had to pledge gold to the Bank of England for a loan. Rupee was devalued again. ~₹17 to ₹25 per dollar. This is when economic liberalisation began. INR in 1993 Shift to market-determined exchange rate. Rupee was no longer tightly controlled. Started moving based on demand and supply. INR in 2000-2010 Relatively stable phase. Rupee stayed between ₹40-50 per dollar. Strong growth, capital inflows, and IT exports helped. INR in 2013 The Taper tantrum. The US hinted at reducing their stimulus. Foreign investors panicked and pulled money out of emerging markets like India. Rupee fell sharply to ~₹68. INR in 2018-2022 Gradual weakening again. Oil prices rose, inflation, and the Russia-Ukraine war happened. Pushed rupee further to ₹70-80. Majorly, three reasons: US-Israel-Iran conflict; Brent crude hitting $110+ Foreign investors’ panic US Federal Reserve’s high interest rates 1. India imports over 80% of its oil. The US-Israel-Iran war is entering its fourth week. Tensions are super high at the Strait of Hormuz. Brent crude has blasted past $110 per barrel. HOW: We pay for this oil in US dollars. Oil prices jump, our import bill explodes. To pay that bill, Indian companies have to sell massive amounts of rupees to buy dollars. Which is already expensive for us. 2. FPIs are panicking. They’ve pulled nearly ₹88,180 crore out of Indian stocks. HOW: When there’s a war, investors move their money from potentially risky emerging markets like India back to the ever so safe US. When they sell their Indian shares, they convert those rupees back into dollars. This sudden exit pressurises INR. 3. USD is the strongest currency at this point. HOW: The US Federal Reserve has kept interest rates high (~3.5%-3.75%). Holding dollars is obviously more meaningful for global savers. And this isn’t weakening just INR, it's affecting the yen, the euro, and even the pound. The RBI has been trying to slow the fall. I mean, they can’t miraculously stop it completely. They’ve been selling dollars from India’s $700 billion forex reserves to keep the slide gradual. They’re trying to aggressively expand Vostro Accounts with trade partners (like Africa and the Gulf) to lower the dollar dependence. By paying for imports (like oil or gold) in rupees instead of dollars. Our govt. is also expected to launch NRI Bonds or ease rules for FPIs in the corporate bond market to attract fresh dollars into India. It has already started showing up in your everyday expenses. 1. Fuel is expensive. Natural gas is facing a shortage. LPG cylinder crisis, remember? 2. iPhones, laptops, cars, even some medicines, basically anything that is imported becomes more expensive. 3. Inflation doesn’t just apply to oil and imports. Food, logistics, and daily essentials. Everything becomes expensive. 3. Studying or travelling abroad gets costlier (not using the word "expensive" again). But but but... there’s a huge but in this article. Indian exports get a slight advantage. One upside from this fiasco - a weaker rupee makes Indian goods and services cheaper for foreign buyers. IT services, textiles, and exporters can benefit. But this gain is usually slower and limited compared to the immediate cost pressures. The rupee keeps on falling and falling and falling. We now know why. Can it recover? Yes, but not instantly. For the rupee to stabilise, crude oil prices, geopolitical tensions, and the strength of the US dollar need to ease. And what’s important to understand is that the RBI doesn’t aim for a fixed rupee value anymore. Its job is to manage volatility, not defend a specific number like ₹90 or ₹94. Sources:But how did we get here?
And what’s dragging the rupee right now?
What is Indian Govt. doing to deal with this situation?
What a weak rupee actually means for you
Let’s wrap this up