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‘Rs 100 per dollar is no longer a tail risk — it is a credible stress scenario if current conditions persist,’ says Ahmed Azzam, head of financial market research at Equiti Group.
The rupee has fallen about 10% over the past year and is among the weakest-performing Asian currencies in recent months.
The Indian rupee could weaken further and may even approach the 100 mark against the US dollar if the ongoing Iran war continues, according to a Bloomberg report citing global analysts and market indicators.
The rupee has already been under strain. It has fallen about 10% over the past year and is among the weakest-performing Asian currencies in recent months. The ongoing geopolitical tensions have only added to the pressure.
Oil surge, global uncertainty weigh on rupee
According to Bloomberganalysts at Wells Fargo and VanEck have warned that rising oil prices could accelerate the rupee’s decline.
India’s heavy dependence on crude imports means higher oil prices directly raise the import bill, widen the current account deficit and push up inflation — all of which weaken the currency.
Brent crude has surged nearly 44% since the conflict escalated, touching a high of $119.50 per barrel. Some analysts see prices climbing to $150 or even $200 if supply disruptions worsen, particularly around key transit routes such as the Strait of Hormuz.
RBI steps in, but impact seen as limited
The Reserve Bank of India has introduced measures to curb volatility, including capping banks’ end-of-day positions in the onshore currency market at $100 million to limit speculative bets.
However, the market response suggests limited effectiveness. The rupee initially gained as much as 1.4% after the move but later reversed and hit a fresh low of 95.125 on the same day.
Analysts say this indicates that deeper macroeconomic forces are driving the currency.
“Rs 100 per dollar is no longer a tail risk — it is a credible stress scenario if current conditions persist,” Ahmed Azzam, head of financial market research at Equiti Group, was quoted as saying.
He added that the steps taken so far appear to be short-term tools rather than a structural solution.
Markets pricing in further weakness
Derivatives markets are also signalling expectations of further depreciation.
Bloomberg data shows there is about a 13% probability of the rupee touching 100 against the dollar by the end of June, rising to around 41% by the end of the year.
According to BloombergNick Twidale of AT Global Markets said bearish bets on the rupee remain intact.
“100 and beyond is a virtual certainty as long as the war persists,” he said, adding that market forces could outweigh central bank interventions.
War timeline key to currency trajectory
The rupee’s near-term direction will largely depend on how long the conflict continues and how sharply oil prices move.
Aroop Chatterjee, global macro strategist at Wells Fargo, said the currency could breach the 100 mark if the conflict extends through April.
“If the US-Iran war continues through the end of April, I think it’s very likely that dollar-rupee finds itself above 100,” he said.
He noted that during the Russia-Ukraine conflict, several currencies weakened about 10% over a few months. This time, the impact could be more severe due to a sharper oil shock.
Existing vulnerabilities add to pressure
The rupee was already facing headwinds before the conflict escalated, including capital outflows and weak foreign investment. Global funds pulled out around $12 billion from Indian equities in March, marking one of the largest monthly outflows on record.
There are also concerns that remittances from Indians working in Gulf economies could decline if regional growth slows due to the conflict.
Additionally, tighter liquidity conditions following RBI’s measures could raise costs for importers and shift trading activity to offshore markets.
Limited relief even if conflict eases
Some analysts believe the rupee may not recover significantly even if the conflict ends.
“If and when it does end, I’d expect the rupee to resume underperforming,” said Win Thin, chief economist at Bank of Nassau, as per Bloomberg.
Anna Wu, strategist at VanEck, also flagged structural risks. “I think it’s possible to reach 100,” she said, adding that India remains vulnerable due to its dependence on oil imports and recent capital outflows.
April 01, 2026, 3:55 PM IST
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