- The Indian rupee fell 9.9% in fiscal 2026, its worst drop since 2012
- The rupee breached the 95 mark against the US dollar for the first time
- Middle East conflict triggered global market volatility, pressuring the rupee
The Indian rupee has logged its worst financial year performance in over a decade, highlighting mounting pressure on the domestic currency amid heightened global volatility and geopolitical tensions.
In fiscal 2026, the rupee depreciated sharply by 9.9%, marking its steepest annual fall since financial year 2012, when it had plunged 12.4%. This comes after relatively moderate declines in recent years, including a 2.4% fall in fiscal 2025 and 1.46% in fiscal 2024. The currency had earlier seen a significant drop of 7.8% in fiscal 2023 and 3.5% in fiscal 2022, while fiscal 2021 stood out as an exception with a 3.3% appreciation.
Looking further back, the rupee has experienced persistent pressure during the last decade. It declined 8.5% in fiscal 2020, 5.7% in financial year 2019 and 0.5% in fiscal 2018. Fiscal 2017 saw a 2.4% gain, while fiscal 2016 and fiscal 2015 recorded declines of 5.7% and 4.17%, respectively. Fiscal 2014 witnessed a sharp fall of 9.4%, followed by a 6.3% drop in fiscal 2013.
The latest leg of depreciation comes as the rupee breached the psychologically significant 95 mark against the US dollar for the first time on Monday. The currency gave up early gains to weaken by 150 paise, touching 95.11 per dollar, compared to its opening level of 93.47.
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The sharp fall has been largely attributed to the ongoing conflict in the Middle East, which has triggered volatility across global financial markets and exerted pressure on emerging market currencies, including the rupee. In the current month alone, the rupee has depreciated by 411 paise, or 4.5%.
The weakness was already evident last week when the rupee crossed the 94 mark for the first time. On Friday, it opened at 94.15 and depreciated by 1.04 rupees during the session to close at a record low of 94.75 per dollar, compared to the previous close of 93.97 on Wednesday.
The sustained depreciation trend reflects a combination of factors including rising crude oil prices, strong dollar demand, and risk aversion among global investors. With India being a major importer of crude oil, any spike in energy prices tends to widen the current account deficit and weigh on the currency.
Market participants will now closely track geopolitical developments, crude price movements and central bank actions, as these factors are likely to determine the near-term trajectory of the rupee.
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