The RBI expected to intervene periodically to contain excessive volatility and prevent a disorderly depreciation in the rupee
Anindya Banerjee,
Head of Commodity and Currency Research,
Kotak Securities
Mumbai, March 4, 2026: USDINR has surged to a fresh all-time high near 92.30 in the spot market, driven by the sharp rise in crude oil prices and a broader shortage of dollar liquidity in global markets amid the escalating conflict involving Iran, the US, and Israel.
We expect the RBI to intervene periodically to contain excessive volatility and prevent a disorderly depreciation in the rupee. However, as long as crude oil prices remain elevated, the rupee could continue to face depreciation pressures.
The key variable to monitor now is the status of the Strait of Hormuz, a critical artery for global oil shipments. The longer disruptions persist, the higher oil prices are likely to move, which in turn could push USDINR further upward.
Conversely, any quick de-escalation in the conflict and restoration of normal shipping flows through Hormuz could help stabilize crude prices and provide some relief to the rupee.
Near-term outlook: We expect USDINR spot to trade in a range of 91–93.
