Rupee Hits Fresh Lifetime Low, Slips 93.36 vs USD Amid Middle East Crisis

Rupee vs USD: The rupee has hit a new lifetime low of 93.362 per US dollar on Thursday, March 19, eclipsing its previous low 92.62 ⁠per USD.

The rupee has lost approximately 1.77% in the past month alone, with the RBI deploying an estimated USD 18–20 billion in a single week to defend orderly market conditions. 

Meanwhile, Goldman Sachs Group Inc.'s Chief Economist for India, Santanu Sengupta, noted that the Indian rupee may slump to 95 per US dollar over the next year.

The projection is underpinned by a structurally widening current account deficit and the macro fallout from the US-Israeli war on Iran, which erupted on 28 February 2026 and has effectively closed the Strait of Hormuz to commercial shipping.

This grim outlook comes at a time when India's macro exposure to surging oil prices are the highest, alongside the other implication triggered by the Middle East crisis. 

Also Read: 'Very Difficult Situation': Powell Warns Iran War Dents Global Recovery

India's Structural Vulnerability To Oil Shocks

Import dependence: India imports approximately 85% of its crude oil requirements, equivalent to ~4.2 million barrels per day. This makes every sustained price increase a direct balance-of-payments negative.

Hormuz exposure: Approximately 50% of India's crude imports transit through the Strait of Hormuz (Nomura). The effective closure of the waterway means India must source alternative supply — often at a significant premium — or reduce throughput.

Russia supply disruption: India had been importing 1.71 mb/d of Russian crude in 2025, a key buffer for its energy needs. This had fallen to 1.16 mb/d by end-February as the US tariff pressure (50% on Indian goods) made Russian oil politically costly. The loss of this supply valve is critical.

CAD sensitivity: Morgan Stanley estimates that every USD 10/bbl sustained oil price rise widens India's CAD by 50 basis points. Goldman Sachs now projects the CAD at 1.2% of GDP for FY26, versus 0.4% in FY25 — a near-tripling.

Fertiliser import bill: India imports ~85% of its fertiliser requirements. Higher energy prices translate directly into subsidy pressure, which Goldman estimates could rise by 0.3% of GDP.

Airline disruption: Closure of Middle Eastern airspace has forced Indian carriers IndiGo and Air India to cancel or reroute flights, hiking ticket costs and compressing travel sector margins.