The RBI is likely intervening actively through both spot and forward markets, but its role will largely be to smooth volatility rather than reverse the trend.
Anindya Banerjee,
Head of Commodity and Currency Research,
Kotak Securities
Mumbai, March 20, 2026: USD/INR surged to a fresh all-time high, closing 1.08 higher at 93.71, driven by a combination of a global energy shock and worsening capital flows. With disruptions around Hormuz—impacting ~10–12% of global oil flows and ~20% of energy trade—crude prices are pushing higher, keeping pressure on energy-importing currencies like INR. At the same time, FPI outflows are nearing $12 billion, levels last seen during the March 2020 shock, highlighting the intensity of current risk-off sentiment. Speculative positioning has also turned decisively bearish on the rupee, further accelerating the move.
While exporter dollar selling may pick up toward year-end, it is unlikely to offset the near-term pressures from rising crude and persistent dollar demand. As long as Brent trends higher, with a potential move toward $120, the rupee is expected to remain under pressure. The RBI is likely intervening actively through both spot and forward markets, but its role will largely be to smooth volatility rather than reverse the trend. 93 now acts as immediate support, while 94.25 is the key resistance—above which 95 becomes a realistic target.
