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The Indian rupee slipped on Monday, March 18 to breach ₹92.50 against US dollar for the first time ever extending its recent weakness as escalating tensions in the Middle East kept crude oil prices elevated, heightening economic risks for India and weighing on capital inflows. This development comes ahead of the US Federal Reserve's interest rate decision due later today.

The currency weakened to 92.57 against the US dollar, breaching its previous all-time low of 92.4750 recorded last week.

However, Indian stock markets rallied for the third straight session following gains in global peers despite rising geopolotical tensions in the Middle East and rising crude oil prices.

Sensex soared 858 points or 1.1% to day's high of 76,929.30 while Nifty 50 jumped 255 points to day's high of 23,836.

The US Federal Reserve began its two-day policy meeting on March 17, with the outcome due later on March 18, amid heightened uncertainty from the ongoing US-Iran conflict. Markets widely expect the Fed to keep interest rates unchanged at the March 2026 FOMC meeting.

The tensions, which began on February 28, have disrupted global oil supplies and pushed prices higher, raising concerns over persistent inflation above the Fed’s 2% target while also threatening economic growth. This has put the central bank in a difficult position as it balances inflation control with growth support.

“The upcoming FOMC meeting comes at a time when the U.S. Federal Reserve is still balancing the twin objectives of controlling inflation and maintaining labor market stability. Inflation in the United States peaked at nearly 9% in 2021, prompting the Federal Reserve to embark on one of the most aggressive tightening cycles in decades. Between 2022 and 2023, the Federal Funds Effective Rate was raised from 0.125% to 5.375%. We expect the FOMC to maintain the status quo at the upcoming meeting while emphasizing caution regarding inflation risks. In the near term, financial markets are likely to remain sensitive to oil prices, which are currently hovering near $100 per barrel,” said Nachiketa Sawrikar, fund manager, Artha Global Multiplier fund.

Pranati Deva is a seasoned financial journalist with over a decade of experience in high-pressure newsroom environments, currently working as a Senior...

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