India’s rupee may weaken to a record 100 per dollar or beyond if the Iran war drags on, with strategists warning that authorities’ efforts to slow its roughly 10% drop over the past year may only provide temporary relief.

Analysts at Wells Fargo and Van Eck Associates Corp. say elevated oil prices will accelerate the rupee’s decline by worsening inflation and the current-account deficit. Options markets echo that view, with pricing suggesting further losses and signaling expectations of a move toward 100.

Already one of Asia’s worst performers against the dollar this year, the rupee’s slide has spurred the Reserve Bank of India to take one of its boldest steps in more than a decade, capping banks’ end-of-day positions in the onshore currency market at $100 million. The change forces lenders to shrink their books and limits their ability to run large one-sided bets against the rupee.

But the price action on Monday highlighted the limits of such measures: after surging as much as 1.4% at the open on the curbs, the rupee reversed course to hit a fresh low of 95.125 later in the day. The market was closed on Tuesday.

“100 per dollar is no longer a tail risk — it is a credible stress scenario if current conditions persist,” said Ahmed Azzam, head of financial market research at broker Equiti Group in Amman. “The latest measures look more like short-term stabilization tools than a structural solution.”

Hopes are building that the war could be nearing an end after President Donald Trump said he expects the US to wrap it up within two to three weeks. Still, it’s unclear how firm that timeline is. The US has also recently sent more troops to the region, leaving the door open for escalation if Trump changes his mind.

The rupee was already under pressure before the war, weighed down by widening external balances and capital outflows. The oil shock has compounded pressures for the world’s third-largest crude importer, while a potential drop in remittances from Indians in the Gulf may further dent inflows and sentiment.

That backdrop has kept bearish positioning intact. Nick Twidale at AT Global Markets said he continues to see bets against the rupee flow through the firm’s platform even after the latest curbs, suggesting some investors are looking past the RBI’s efforts.

“100 and beyond is a virtual certainty as long as the war persists,” the veteran currency trader said. “The RBI will try and stop the weakness, but macro conditions will still take over. The rupee will turn one day, but it won’t be dictated by the RBI — it’ll be determined by markets.”

Options pricing shows traders assigning about an 13% chance of dollar-rupee trading at 100 by the end of June, and around a 41% probability by year-end, according to data compiled by Bloomberg.

The rupee’s trajectory will depend on how high energy prices rise and how long they stay elevated, said Aroop Chatterjee, a global macro strategist at Wells Fargo. He pointed to Russia’s 2022 invasion of Ukraine as a guide, when the currency fell about 10% over six months. This time, the disruption to oil supply could be more severe, and the rupee has lost less than 5% since the conflict.

“If the US-Iran war continues through the end of the April, I think it’s very likely that dollar-rupee finds itself above 100,” New York-based Chatterjee said.

Brent crude has jumped about 44% since the hostilities broke out late February, reaching a high of $119.50 a barrel. Some analysts warn prices may climb further — potentially to $150 or even $200 — if the near-closure of the Strait of Hormuz persists over the next six to eight weeks.

Chatterjee added the RBI’s curbs risk draining liquidity in the onshore currency market, raising hedging costs for importers and foreign portfolio investors, and pushing more speculative activity offshore beyond the central bank’s reach.

Given the rupee’s weakness even before the war — driven by concerns over US-India trade ties, the impact of artificial intelligence on key services exports and subdued foreign investment — some investors doubt that even an end to the Middle East conflict would fully arrest its decline.

“If and when it does end, I’d expect the rupee to resume underperforming,” said Win Thin, chief economist at Bank of Nassau 1982 Ltd. with nearly four decades of market experience. “That is, it won’t see much relief.”

Uncertainty over the war’s duration has prompted global funds to pull about $12 billion from Indian equities in March, its steepest monthly outflow on record.

Anna Wu, a cross-asset strategist at VanEck, said India remains “between a rock and a hard place,” citing its vulnerability to oil shocks and the historic foreign capital outflows.

“I think it’s possible to reach 100,” she said, flagging the lack of a clear tightening path from the central bank and mounting risks to economic growth, which she calls “the best card India has.”