What’s Behind the Rupee's Decline Against the Dollar? Insights from Market Analysts

The Indian rupee has recently depreciated against the US dollar, closing at 96.03 due to negative global market sentiments following the US's rejection of a deal proposal from Iran. Analysts suggest that the ongoing stalemate between the US and Iran, coupled with rising crude oil prices, is exerting pressure on the rupee. The dollar index has also seen a slight increase, while domestic equity markets have faced significant declines. This article delves into the factors affecting the rupee's performance and the potential for future interventions by the RBI.

By Narendra Chaudhary Sep 28, 2026, 16:25 IST

Rupee Weakens Amid Global Market Concerns

Mumbai: The Indian rupee fell by 28 paise, closing at 96.03 against the US dollar on Monday, influenced by negative sentiment in global markets following the US's rejection of a deal proposal from Iran, which has dampened hopes for the reopening of the Strait of Hormuz.

Forex analysts noted that the ongoing deadlock between the US and Iran has led to a decline in risk appetite, causing a drop in risk assets and a rise in crude oil prices, which may continue to exert pressure on the rupee.

In the interbank foreign exchange market, the rupee began the day at a low of 95.89 against the dollar and further declined to close at 96.03, marking a 28 paise decrease from the previous session.

On the preceding Friday, the rupee had gained 24 paise, finishing at 95.75 against the dollar.

Anuj Choudhary, a Research Analyst at Mirae Asset Sharekhan, stated, "The rupee's decline of nearly 20 paise is attributed to risk-off sentiments in global markets after the US dismissed a deal proposal from Iran, which has reduced expectations for the Strait of Hormuz's reopening. Brent crude oil prices have surpassed USD 108 per barrel, and global equities have fallen, while the US dollar and Treasury yields have strengthened."

Choudhary also mentioned that the rupee is likely to trade negatively as global risk sentiments worsen due to the ongoing US-Iran stalemate.

"The combination of declining risk assets and rising crude oil prices may continue to pressure the rupee. However, any intervention from the RBI could provide support at lower levels," he added, suggesting that traders might look for cues from upcoming speeches by various FOMC members.

Currently, the dollar index, which measures the dollar's strength against a basket of six currencies, is at 101.12, reflecting a 0.16 percent increase.

Brent crude futures, the global oil benchmark, are trading up by 3.57 percent at USD 108.04 per barrel.

In the domestic equity market, the Sensex dropped by 1,124.02 points, closing at 72,771.72, while the Nifty fell by 360.25 points to settle at 22,780.25.

Foreign Institutional Investors (FIIs) sold equities worth Rs 3,693.93 crore on a net basis on Friday, according to exchange data.

Additionally, India's foreign exchange reserves decreased by USD 14.881 billion to USD 765.901 billion during the week ending September 18, primarily due to a decline in foreign currency assets, as reported by the RBI.