Rupee Plunges to Record Low as Dollar Surges; Markets Lose ₹18 Lakh Crore in Two Sessions

Escalating West Asia tensions push crude prices higher, weaken the rupee to 95.58 per dollar, and trigger a sharp sell-off in equities, eroding investor wealth significantly.

Mumbai | 31 March, 2026: India’s financial markets witnessed a sharp downturn on Monday as the rupee slumped to a record low against the US dollar, while benchmark equity indices registered steep losses amid rising global uncertainty.

The Indian currency weakened to 95.58 per dollar during intra-day trade, marking its lowest-ever level. It later closed near 95.23, down 42 paise from the previous session. The decline comes against the backdrop of escalating geopolitical tensions in West Asia, which have disrupted global energy supply chains and intensified pressure on emerging market currencies.Equity markets mirrored the negative sentiment, with the BSE Sensex plunging 1,635 points, or 2.22%, to close at 71,947. The Nifty 50 also declined sharply by 488 points, or 2.14%, ending at 22,331. Over the past two trading sessions, the Sensex has dropped 3,326 points, while the Nifty has shed 975 points.

The sell-off resulted in massive erosion of investor wealth, estimated at around ₹18 lakh crore in just two sessions. Market participants attributed the sharp fall to a combination of global and domestic factors, including rising crude oil prices, foreign fund outflows, and concerns over inflation.

Global oil markets have been significantly impacted by ongoing conflict involving the United States, Israel, and Iran, which has disrupted shipping through the strategically vital Strait of Hormuz. Nearly 20% of global crude and liquefied natural gas supplies pass through this route. As a result, Brent crude prices surged by about 3% to $116 per barrel, while US WTI crude climbed to around $101 per barrel.

The spike in crude prices has heightened fears of imported inflation in India, a major oil-importing nation. Higher fuel costs are expected to have a cascading effect on transportation, manufacturing, and consumer prices, further weighing on economic sentiment.

Foreign institutional investors (FIIs) have intensified their selling activity, pulling out approximately ₹1.23 lakh crore from Indian equities up to March 27. In addition, total foreign investment in Indian markets declined by $79 billion to $710 billion during the first half of March, marking the steepest outflow since the pandemic period.

Currency analysts noted that the rupee initially showed some resilience, opening stronger at 93.56 per dollar, but quickly reversed course amid sustained equity market weakness and capital outflows. The continued volatility in global markets is expected to keep pressure on the rupee in the near term.

Experts suggest that stabilisation in crude prices and easing geopolitical tensions will be crucial for market recovery. Until then, both currency and equity markets are likely to remain sensitive to global developments.

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