The rupee fell to 92.6225 per dollar, eclipsing its previous low of 92.4750 hit last week.
The currency has declined about 1.5% since the Iran war began amid nearly $8 billion of foreign portfolio outflows from local stocks over March so far.
Brent crude oil prices have climbed about 40% since the war broke out. Sustained high oil prices would widen the current account deficit and fuel inflation in India, leaving the currency more exposed than many of its peers.
India imports over 80% of its energy needs. The Middle East conflict also threatens to curb remittances from the diaspora and hurt exports to the region.
The rupee has not fallen more steeply largely on the back of frequent interventions by the central bank, including on Wednesday, traders said.
With oil remaining around $100 per barrel, the pressure on the rupee will likely continue till the tensions ease, Dhiraj Nim, an economist and FX strategist at ANZ, said.”The RBI will be able to defend against speculation, but insofar as high oil prices will weaken the balance of payments, the RBI may not be adamant to hold the INR.”
The rupee was also pressured by elevated demand to buy dollars at the daily reference rate and a pick-up in importer hedging once the 92.50 level was breached, traders said.
