Fueled by escalating geopolitical tensions in West Asia and crude oil prices exceeding $100/barrel, the US dollar surged 4% since January 2026, hitting a 10-month high of 100.53 on the DXY index on March 13, 2026. This safe-haven demand strengthened the dollar, driving the USD/INR exchange rate to a record high of 94.86 on March 29, 2026, and causing a 5% depreciation of the rupee since the start of 2026. Foreign institutional investors withdrawing over $10 billion from Indian equities into US assets intensified dollar demand.

Medium confidenceCyclical

CURRENT STATE

In late March 2026, the Indian rupee hovered near record lows around ₹94 per dollar, having depreciated nearly 4% in March and over 5% year-to-date. The US dollar's safe-haven rally, amidst geopolitical tensions and crude oil prices above $100/barrel, increased India's import costs, widening the trade deficit to $27.10 billion in February 2026. Simultaneously, foreign portfolio investors are selling over $10 billion worth of equities in India, further pressuring the rupee, with exports declining 0.8% and imports surging 24%.

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