FX.co ★ Rupee Steady as Inflows Cushion Oil Risks

The Indian rupee traded in a narrow band around 95.6 per dollar, supported by robust capital inflows and continued intervention from the Reserve Bank of India (RBI). These factors helped cushion the currency, even as month-end dollar demand and elevated crude oil prices capped any significant appreciation.

The RBI reported that it has mobilized nearly $73 billion through measures introduced in June to bolster the balance of payments, thereby enhancing its capacity to defend the rupee. Market participants remained wary of initiating substantial long-dollar positions amid expectations that the RBI would step in if the exchange rate approached 95.80 per dollar.

At the same time, month-end derivative expiries and corporate dollar outflows were seen as potential sources of additional pressure on the rupee. Brent crude prices stayed elevated near $94 per barrel, reflecting ongoing tensions related to the Iran conflict and adding to the currency’s headwinds.

A softer US dollar lent some support to the rupee, with the dollar index hovering around 98.8 after recording sharp losses the previous week, as rising US Treasury yields intensified concerns about the country’s mounting debt burden.