The Indian rupee fell to an all-time low on Monday, as stubbornly high energy prices due to the Iran war sent global bond yields soaring, denting risk appetite and deepening economic headwinds confronting the world's third-largest crude importer.
The rupee fell nearly 0.3% to 96.2275 per dollar, eclipsing its previous all-time low of 96.1350. Asia's worst-performing currency of 2026 has fallen to record lows for five straight sessions.
Traders said the losses would have been steeper if not for likely dollar-selling intervention by the Reserve Bank of India.
In addition to market interventions, Indian policymakers have deployed rare regulatory curbs to support the rupee including, most recently, restrictions on most silver imports.
The currency has declined 5.5% since the Iran war began.
"With chances of oil staying higher for longer, we revise our forecast for further INR weakness to 96/USD by mid-2026 and 98/USD by end-2026," analysts at BofA Global Research said in a note.
"Growth risks dampen prospects for any reversal in equity inflows while low carry, high hedging costs, concerns around wider fiscal deficit and rate-hikes would reduce scope for debt flows."
Overseas investors have net sold over $23.5 billion of local stocks and bonds since March.
Regional stocks slumped and bonds from Tokyo to New York extended losses as rising energy prices from the ongoing Middle East war fanned inflation fears.
Efforts to end the Iran war appeared to have stalled following a drone strike at a nuclear power plant in the United Arab Emirates.
The pressure reflected on Indian assets as well, with the 10-year bond yield up 6 basis points to 7.12% while the benchmark equity index Nifty 50 slumped over 1%.
