Mumbai: On Monday, the rupee closed at a record 93.98/$, down 35 paise from its previous closing level of 92.63. In the process, it breached its prior low of 93.73 and briefly slipped to 94 after market hours. Feeling the impact of the West Asia conflict on the Indian economy through inflation, growth and current account deficit, investors sold equities, bonds and the local currency as fears of war raised the risk of prolonged energy disruptions.Foreign portfolio investors pulled out more than $11 billion from equities and bonds in March, the heaviest withdrawal since October 2024 and increasing pressure on the rupee. The immediate reason for this was the 48-hour deadline given by US President Trump to Iran to open the Strait of Hormuz. However, after markets closed, Trump announced a postponement of the deadline to attack Iran’s power plant, leading to gains in financial markets.“The rupee traded 0.37% lower at 93.95 due to rising tensions in West Asia. Rising crude oil prices significantly weakened the sentiment, coupled with higher outflows and import bill due to India’s position as a net importer,” said Jatin Trivedi, analyst at LKP Securities. The rupee has fallen about 3% since the start of the Iran war on February 28.
