Rupee Breaches 92 for First Time as West Asia War Rattles Markets

The Indian rupee plunged to a historic low of 92.17 against the US dollar on Wednesday as escalating tensions in West Asia triggered a sharp sell-off in domestic markets. The currency weakened by 68 paise in early trade, breaching the 92-per-dollar mark for the first time, while nearly Rs 9.7 lakh crore in investor wealth was wiped out over two trading sessions amid fears of oil supply disruptions.

The widening conflict involving Iran, the United States and Israel has intensified global risk aversion, pushing crude prices higher and exerting fresh pressure on India’s import-dependent economy.

Oil Shock, Currency Pressure

India imports more than 80 per cent of its crude oil requirements, making the rupee highly sensitive to spikes in global energy prices. Brent crude climbed to around USD 82.5 per barrel, its highest level in over a year, while US West Texas Intermediate rose above USD 75.

Concerns have also mounted over possible shipping disruptions in the Strait of Hormuz, a key global oil transit route. A sustained surge in crude prices threatens to inflate India’s import bill, widen the current account deficit and accelerate inflation.

The rupee had already hovered near record lows of 91.99-92.02 in January 2026. Rising oil prices, capital outflows and global uncertainty have now intensified the downward pressure.

Markets Bleed As Investor Wealth Erodes

The market downturn led to a massive erosion in valuation. The total market capitalisation of BSE-listed firms declined from Rs 456.17 lakh crore on Monday to Rs 446.47 lakh crore, erasing nearly Rs 9.7 lakh crore in two sessions.

Benchmark indices faced heavy selling. The Sensex tumbled about 1,710 points to 78,529, its lowest level since April last year, while the Nifty 50 dropped nearly 477 points to 24,389, slipping below the 24,400 mark after almost seven months.

The sell-off followed US and Israeli military strikes on Iran and retaliatory attacks across the region, which have heightened concerns over energy supply disruptions.

FII Outflows Add To Pressure

Foreign institutional investors continued to pare exposure. According to NSE data, FIIs sold equities worth Rs 3,295.64 crore in the previous session, while domestic institutional investors purchased shares worth Rs 8,593.87 crore.

The decline was broad-based. Larsen & Toubro, IndiGo, Adani Ports, Mahindra & Mahindra and Bajaj Finance fell between 3 and 6 per cent. Infosys, BEL and HCLTech showed relative resilience.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said inflation remains the primary risk. He noted that a prolonged conflict could further weaken the rupee and affect corporate earnings, though he advised long-term investors to remain composed during corrections.

Global markets also remained under strain. South Korea’s Kospi index plunged more than 12 per cent, reflecting the widening global impact of the West Asia conflict on financial systems.

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