Rupee Closes at 95.80 as RBI’s $10 Billion Swap Push and Easing Crude Offset Strong Dollar and Reserve Drawdown 

Mumbai, Sept 26: The Indian rupee appreciated 19 paise to close at 95.80 against the US dollar on Friday, 25 September 2026, holding above the psychologically significant 96-mark and ending the week nearly flat despite persistent pressure from elevated crude oil prices, a firm dollar index at 101, and sustained foreign portfolio outflows.  

The rupee recovered from a one-week low of 95.9550 on Thursday as the Reserve Bank of India stepped in with dollar sales and sell-buy swaps, while a pullback in Brent crude prices below $106 and reports of potential US-Iran diplomatic negotiations provided additional relief. The currency had closed the previous week at 95.8725, marking a 0.3% weekly decline, and traded within a range of 95.57 to 95.9550 through the five sessions. 

Rupee Opens at 95.86 and Ends at 95.80 in Volatile Week 

The rupee opened the week at 95.86 against the dollar on Monday, 21 September, and traded in a range of 95.57 to 95.9550 through the week before settling at 95.80 on Friday. The currency gained 20 paise on Tuesday to close at 95.58, its strongest session of the week, supported by a decline in the US 10-year Treasury yield from 5.01% to 4.93% and reports indicating improved oil shipments through the Strait of Hormuz.  

The rupee then weakened 12 paise to 95.74 on Wednesday as dollar demand from oil importers intensified and the dollar index climbed toward its two-month high. Thursday proved to be the weakest trading day, with the rupee falling to a one-week low of 95.9550 before recovering on Friday as crude prices eased and the RBI intervened. 

EUR at 109.99, GBP at 128.09 and JPY at 60.99 as Dollar Strength Weighs 

The rupee weakened against the euro, which was quoted at 109.99 INR per EUR as of 18 September, reflecting the single currency’s resilience against a broadly stronger dollar. The British pound traded at 128.09 INR per GBP, while the Japanese yen was quoted at 60.99 INR per 100 JPY. The dollar index, which measures the greenback against a basket of six major currencies, climbed more than 1% during the week to a two-month high of 101.2 on Thursday before easing to 101.09 on Friday, its first back-to-back weekly gains since June.  

The stronger dollar made greenback-priced imports more expensive for India and exerted broad pressure on Asian currencies, with the rupee declining between 0.1% and 0.5% in line with regional peers including the Indonesian rupiah and Philippine peso. 

Brent Above $106 and US Yields at 5.15% Lift India’s Import Bill 

Brent crude prices surged to $106.88 per barrel on Thursday, 24 September, following Houthi missile attacks on Saudi Aramco facilities, before easing to $105.40 per barrel on Friday. Elevated crude prices directly increase India’s import bill, widen the trade deficit and create sustained demand for dollars from oil importers. Simultaneously, the 10-year US Treasury yield climbed to 5.15%, its highest level since July 2007, while the 30-year yield touched 5.446%, the highest since June 2004. Higher US yields attract capital away from emerging markets and strengthen the dollar, creating a dual headwind for the rupee.  

The combination of costly crude and elevated yields forced importers to hedge aggressively, capping the rupee’s gains despite intermittent relief from easing oil prices. India’s crude oil basket, which reflects the average price of crude grades imported by Indian refiners, surged to $123.67 per barrel on 24 September, according to Petroleum Planning and Analysis Cell data, averaging $115.48 per barrel for September so far, up 28% from the August average of $90.19 per barrel. 

RBI Conducts $10 Billion in Sell-Buy Swaps to Drain ₹11 Lakh Crore Surplus 

The Reserve Bank of India carried out currency swaps worth at least $10 billion in recent weeks, including deals with maturities ranging from one month to about six months, to reduce liquidity in the financial system and curb inflation risks from surplus cash. In these sell-buy swaps, the RBI sells dollars to banks in exchange for rupees, agreeing to reverse the deal at a later date, thereby draining rupee liquidity.  

The central bank also likely intervened in the spot market on Wednesday and Friday, with state-run banks spotted conducting dollar/rupee sell-buy swaps on the RBI’s behalf. Banking system liquidity surplus stood at ₹4.44 lakh crore ($46.38 billion) on Tuesday, down 60% from its record high of ₹11.16 lakh crore hit on 6 September. The one-year forward yield rose as much as 28 basis points in three sessions to touch 3.50% on Friday, its highest level since May. The RBI’s actions were part of a broader strategy to manage liquidity conditions amid heavy dollar demand from oil importers and foreign investors. 

FPI Outflows Cross ₹23,676 Crore in September as Global Risks Mount 

Foreign portfolio investors remained net sellers for a fifth consecutive week, offloading ₹7,620 crore of Indian equities during the week and taking cumulative September outflows to ₹23,676 crore through 19 September, according to National Securities Depository Limited data. Higher crude prices, elevated US bond yields, geopolitical risks and currency concerns were cited as the primary drivers behind renewed foreign selling.  

FPIs had bought ₹11,045 crore in July and ₹10,231 crore in August, raising hopes of a sustained return, but September’s outflows reversed that trend. Despite the secondary-market selling, foreign investors continued to show interest in India’s primary market, with FPI investment through the primary market standing at ₹2,703 crore up to 19 September. The outflows added to dollar demand in the forex market, contributing to the rupee’s weakness during the middle of the week. 

Forex Reserves Fall $14.89 Billion to $765.90 Billion on FCA Decline 

India’s foreign exchange reserves dropped by $14.881 billion to $765.901 billion during the week ended 18 September, according to RBI data released on Friday. Foreign currency assets, the largest component of the reserves, fell by $14.816 billion to $630.980 billion, reflecting the impact of dollar sales and valuation changes. The value of gold reserves increased by $68 million to $111.292 billion, while Special Drawing Rights declined by $106 million to $18.739 billion.  

The reserve position with the International Monetary Fund stood at $4.89 billion. The drawdown followed a record high of $785.706 billion in the week ended 4 September, when reserves had jumped by a record $44.903 billion. The decline in reserves reflected the RBI’s intervention activity during the week, as the central bank sold dollars to stabilise the rupee. 

Rupee Recovers 37 Paise in Prior Week Despite Dollar Index at 100.35 

In the prior week ended 18 September, the rupee had recovered 37 paise against the dollar despite the dollar index gaining about 0.7% to 100.35. A decline in the US 10-year Treasury yield from 5.01% to 4.93% offered some support to the local currency during that period. Oil prices moderated as reports indicated an improvement in shipments through the Strait of Hormuz, with Saudi Arabia increasing exports to about 2.9 million barrels per day compared with 0.7 million barrels per day in August, helping cap the rally in crude prices.  

Net FPI outflows stood at about $600 million over that week, taking cumulative September outflows to $3.1 billion, while year-to-date net outflows crossed $19 billion. The rupee’s recovery in the prior week was attributed to the RBI’s strategic intervention and a temporary easing of global risk sentiment. 

Dollar Demand From Oil Importers and Fed Rate Bets Cap Rupee Gains 

The rupee’s gains on Friday were capped by US dollar demand from local importers, high crude prices and a stronger greenback driven by hawkish Federal Reserve signals. The Federal Reserve raised its benchmark rate by 25 basis points to 3.75–4.00% on 16 September 2026, in a unanimous 12–0 vote, and Fed officials indicated that additional tightening may be necessary. Markets responded by raising the probability of an October rate hike to approximately 68–70%, up sharply from 55% a day earlier.  

The prospect of further US rate increases strengthened the dollar and exerted pressure on risk assets like emerging-market currencies. The rupee’s near-term technical range was seen between 95.55 and 96.30, with spot USD/INR trading above the 20-day exponential moving average of 95.6104 and a bullish reference around 97.00 if the 96.00 level was breached. The rupee’s movement during the week reflected the interplay of these global and domestic factors, with the RBI’s intervention providing a cushion against sharper losses. 

Rupee Gains on Tuesday as Yields Dip and Oil Shipments Improve 

The rupee’s strongest session came on Tuesday, 22 September, when it appreciated 20 paise to close at 95.58 against the dollar. The gain was driven by a decline in the US 10-year Treasury yield from 5.01% to 4.93%, which reduced the appeal of dollar-denominated assets, and reports indicating an improvement in oil shipments through the Strait of Hormuz.  

Saudi Arabia had increased exports to about 2.9 million barrels per day compared with 0.7 million barrels per day in August, helping to cap the rally in crude prices and easing concerns about India’s import bill. The rupee also benefited from a modest pullback in the dollar index from its recent highs, although the greenback remained firm overall. 

Rupee Slips on Wednesday and Thursday as Dollar Index Hits 101.2 

The rupee weakened on Wednesday, 23 September, closing 12 paise lower at 95.74, as dollar demand from oil importers intensified and the dollar index climbed toward its two-month high. The US 10-year Treasury yield surged to 5.104% on the same day, its highest since July 2007, further strengthening the dollar.  

On Thursday, 24 September, the rupee fell to a one-week low of 95.9550 as Brent crude surged to $106.88 per barrel following Houthi missile attacks on Saudi Aramco facilities. The rupee’s decline on Thursday reflected the combined impact of higher crude prices, a stronger dollar and the dollar index reaching 101.2, its highest level in two months. The RBI’s intervention on Thursday and Friday helped the rupee recover from its weekly low. 

Rupee Recovers on Friday as Crude Eases and RBI Steps In 

The rupee recovered 15 paise on Friday, 25 September, to close at 95.80 against the dollar, drawing relief from a modest pullback in crude prices and the RBI’s intervention. Brent crude eased to $105.40 per barrel on Friday, down from Thursday’s high of $106.88, while reports emerged of potential US-Iran diplomatic negotiations over a phased reopening of the Strait of Hormuz.  

The RBI’s dollar sales and sell-buy swaps provided support to the rupee, with state-run banks spotted conducting dollar/rupee sell-buy swaps on the central bank’s behalf. The rupee’s recovery on Friday was also supported by a slight easing in the dollar index from its two-month high of 101.2 to 101.09. 

The rupee closed at 95.80, appreciating 19 paise on Friday but ending the week nearly flat as Brent above $105, a 101 dollar index and 5.15% Treasury yields capped gains. The RBI conducted $10 billion in sell-buy swaps and likely intervened in the spot market, while forex reserves fell $14.89 billion to $765.90 billion. FPI outflows crossed ₹23,676 crore in September, with the rupee trading in a 95.57–95.9550 range. 

 Source 

• https://rbi.org.in/