Foreign portfolio outflows have added to the strain on Rupee, with overseas investors pulling more than $8 billion from Indian equities in March, the heaviest monthly withdrawal since January 2025.
BY PC Bureau
March 20, 2026: The Indian rupee fell to a fresh record low on Friday, slipping past the ₹93 mark in offshore markets and weakening sharply onshore as persistent dollar demand, surging crude oil prices and global risk aversion battered the currency.
The rupee touched a record low of 93.15 per U.S. dollar as markets reacted to heightened economic risks from the widening Middle East conflict.
The selloff comes as investors increasingly favour safe-haven assets, lifting the U.S. dollar and putting pressure on emerging-market currencies. For India, the strain has been amplified by the recent jump in oil prices after attacks on key Gulf energy infrastructure raised fears of prolonged supply disruption. Brent crude briefly surged above $119 a barrel this week before easing back toward $107, but the spike was enough to rekindle concern over India’s inflation outlook and external balances.
India is particularly exposed because it imports the bulk of its crude oil requirements. When oil prices rise sharply, the country’s import bill swells, demand for dollars increases and pressure builds on the rupee. Analysts say sustained high crude prices could widen India’s current account deficit and complicate the inflation outlook at a time when policymakers are already navigating fragile global growth and tight financial conditions.
Another major factor behind the rupee’s weakness is the steady outflow of foreign capital from Indian equities. Foreign portfolio investors sold ₹527.04 billion worth of Indian shares in the first half of March, with financial stocks accounting for about 60% of those outflows. Reuters reported that total foreign withdrawals from Indian equities in March have crossed $8 billion, marking the heaviest monthly selloff since January 2025.
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The broader strength of the dollar has added to the pressure. Markets remain cautious after the U.S. Federal Reserve signalled limited scope for aggressive rate cuts, keeping global liquidity conditions tight and supporting the greenback. In that environment, higher-yielding and risk-sensitive emerging-market assets, including the rupee, have struggled to attract fresh inflows.
Traders have also been watching the Reserve Bank of India closely for signs of intervention. Reuters has reported repeated likely dollar-selling by the RBI through state-run banks in recent sessions to slow the rupee’s decline, though the central bank has not publicly detailed any such operations. The intervention has helped temper volatility at times, but has not reversed the broader downward trend as oil prices and external risks continue to dominate sentiment.
A weaker rupee raises the risk of imported inflation, especially in fuel, chemicals, edible oils and other commodities priced in dollars. That can eventually feed through to higher transport costs, manufacturing inputs and retail prices, squeezing both companies and households. Economists warn that if crude remains elevated for an extended period, the pressure on inflation and growth could become more pronounced in the months ahead.
Even as Indian equities rebounded on Friday after the previous session’s steep fall, the rupee remained under pressure, underlining how fragile sentiment still is. Market participants are now focused on three main variables: whether crude prices cool further, whether foreign outflows begin to ease, and whether the RBI steps up intervention to prevent disorderly moves in the currency
