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Mumbai: The rupee on Monday slumped to breach the psychologically crucial barrier of 95/$, upending market expectations of a stronger year-end showing, as it finished FY26 by retreating the most in 14 years – nearly 11%.

The last month, coinciding with the Iran war, was particularly brutal and accounted for a 4% decline. The currency, which touched an all-time low of 95.21/$, had briefly advanced to 93.59/$ in the early hours, its strongest level on Monday. The trading amplitude for the unit was one of the widest Monday.

Intervention from the Reserve Bank of India (RBI) in the last 15 minutes of trading lifted the local currency to close at 94.83/$ on the last trading day of the year. It closed at 94.81/$ on Friday.

The rupee was widely expected to strengthen on Monday.

Rupee Seen Staying at 94-95 per Dollar

This was following Friday’s central bank directives to curb lenders’ open positions in FX to $100 million. However, high dollar demand from oil companies, importers and hedge funds caused the rupee to retrace its steps and trade at record lows, traders said.
“The curbs by RBI created an arbitrage between NDF and onshore rates. With simultaneous buying in the NDF market and selling in the domestic market, along with year-end dollar demand from oil companies and corporates, the rupee came under pressure,” said Anil Bhansali, head of treasury, Finrex Treasury Advisors.
The rupee is expected to remain between 94/$ and 95/$ on April 2, when the market opens after a 2-day holiday.
Currency markets are closed on March 31, April 1, and April 3, making this a short trading week.

The currency opened at 93.59/$ on Monday and depreciated continuously till about 3:15 PM to a low of 95.22/$. At these levels, dollar sales by the RBI helped trim losses, allowing the rupee to close slightly stronger.

“Push for dollars from oil companies, importers, hedge funds and corporates was very high due to sharp rupee appreciation in the morning,” said Kunal Sodhani, head of treasury at Shinhan Bank India.

U.S. stocks ended mostly lower on Monday as U.S. President Donald Trump’s new warning to Tehran and a widening of the Middle East war offset optimism over his comments on U.S. discussions with Iran.

Trump said the U.S. was in serious discussions with a “more reasonable regime” to end the war, but ‌repeated his threat ⁠to open the ⁠Strait of Hormuz or risk U.S. attacks on Iranian oil wells and power plants. Iran described U.S. peace proposals as unrealistic.

Investors have been focused on how oil prices will impact the global economy after they shot up since the start of the war.

“The administration continues to send mixed messages,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“When the messages seem good, to the extent they are believed, it helps the market. If something they ⁠say implies ‌a more aggressive approach, the market sells off.”

At the same time the conflict has been escalating. Yemen’s Iran-backed Houthi militia entered the war over the weekend. All three of ⁠the major indexes started the day higher after logging sharp declines in the previous session. Since the war started, the Dow, the Nasdaq and the small-cap Russell 2000 have all confirmed correction territory, ending 10% lower from their record-high closes.
According to preliminary data, the S&P 500 lost 25.52 points, or 0.40%, to end at 6,343.33 points, while the Nasdaq Composite lost 153.16 points, or 0.73%, to 20,795.20. The Dow Jones Industrial Average rose 53.27 points, or 0.12%, to 45,219.91. Comments from Federal Reserve Chair Jerome Powell gave some support to stocks. Powell said ‌longer-term inflation expectations appear to be holding despite the current energy shock, and the Fed does not yet need to make a decision on how to react to the latest troubles. Both U.S. crude oil ⁠and Brent settled higher.

Money market participants have priced out any easing from the Federal Reserve this year, compared with two cuts expected before the war began, per the CME Group’s FedWatch Tool. The S&P 500 energy index was down slightly and technology stocks were among the biggest drag on the S&P 500. On the flip side, the financial index gained after the U.S. Department of Labor issued long-awaited guidelines intended to clarify how trustees can add alternative assets to 401(k) retirement plans.

Shares of asset managers climbed with Blackstone and KKR both higher.