Rupee Recovers 18 Paise to 96.55 Amid RBI Intervention; Currency Avoids Record Low Despite Brent Crossing $100

Mumbai, July 25: The Indian rupee concluded a tumultuous week of trading on a resilient note, recovering 18 paise to settle at 96.55 (provisional) against the US dollar on Friday, July 24, 2026, amid likely intervention by the Reserve Bank of India (RBI). The recovery came despite Brent crude surging past the USD 100 per barrel mark for the first time since May, escalating geopolitical tensions in West Asia, and persistent foreign institutional investor outflows from domestic equity markets.  

The rupee had opened weaker at 96.81 on Friday and traded in a wide range of 96.30-96.81 before settling stronger. This followed Thursday’s session when the rupee ended 20 paise weaker at 96.73, descending to nearly its lowest level for the second time in two months, weighed down by surging crude oil prices amid worsening West Asian conflict. 

Rupee Extends Losing Streak to Fifth Session on July 20, Weakens to 96.4575 

The trading week began on a sombre note for the Indian currency, with the rupee extending its losing streak for a fifth consecutive session on July 20. The currency weakened to 96.4575 per US dollar, edging closer to its record low of 96.9650 hit in May. Persistent geopolitical tensions in the Middle East, surging crude oil prices, and sustained foreign fund outflows from domestic equities kept the local unit under relentless pressure throughout the session.  

The RBI intervened in both offshore and onshore currency markets by selling US dollars to curb the depreciation, but the impact was limited. Barclays noted that the central bank’s FCNR measures were yet to generate meaningful short-term support for the currency. Rising crude oil prices had renewed concerns over inflation and India’s exposure to an energy shock, impacting the rupee and foreign portfolio investment flows. 

Rupee Snaps Five-Day Losing Streak on July 21, Strengthens to 96.24 

The rupee snapped its five-day losing streak on July 21, appreciating to around 96.24 per US dollar and recording its strongest session in nearly two weeks. The recovery was driven by a brief decline of more than 1% in Brent crude prices, providing temporary relief to the currency.  

Market sentiment was further bolstered by the RBI’s announcement that its June measures had mobilised USD 20.72 billion, including USD 17.4 billion through FCNR(B) deposits. Nomura maintained its expectation that total inflows could eventually reach USD 55 billion. The brief respite, however, proved short-lived as the underlying pressures on the currency remained firmly intact. 

Rupee Weakens Sharply to 96.57 on July 22 as Brent Climbs to $95 

Tuesday’s gains were completely erased within a single trading session on July 22, as the rupee weakened sharply to 96.57 per US dollar. Brent crude climbed to around USD 95 per barrel, supported by escalating tensions between the US and Iran and renewed threats to global shipping routes. Oil prices had risen by more than 25% during July, increasing concerns over India’s inflation and current account deficit. The RBI again sold dollars through state-run banks to slow the depreciation, but the pressure on the currency intensified as geopolitical risks mounted.  

The rupee’s 15-day correlation with Brent crude reached 0.9, highlighting the exceptionally strong relationship between oil prices and the currency. 

Rupee Trades In Narrow Range on July 23 as RBI Intervenes to Avoid Record Low 

On July 23, the RBI reportedly intervened once again as Brent crude continued its rally. The rupee traded in a narrow range between 96.48 and 96.54, avoiding a fresh record low. Brent crude crossed USD 96 per barrel during Asian trading before continuing its rally. The currency was little changed on Thursday, wedged between enduring pressure on account of a searing rally in oil prices and likely central bank intervention in the foreign exchange market.  

The rupee was at 96.5350 per dollar as of 10:00 a.m. IST, nearly flat compared to its close at 96.5650 in the previous session. The US military announced the 12th consecutive night of attacks on Iran as the conflict escalated. 

RBI Steps Up Intervention Across Markets on July 24 as Rupee Threatens Record Low 

The Reserve Bank of India likely intervened across market segments on Friday, July 24, stepping up defence of the currency as it threatened to breach record low levels pressured by surging oil prices. The central bank likely intervened in the dollar-rupee non-deliverable forward (NDF), onshore spot and forward markets as the rupee slid in the NDF market before local markets opened.  

State-run banks were spotted selling dollars just before the local market opened at 9 a.m. IST, most likely on behalf of the RBI. The selling continued in early trade, pulling the rupee up to 96.50 per US dollar after it fell to 96.80 on the interbank order-matching system. 

“Here, There, And Everywhere”: RBI’s Multi-Pronged Intervention Strategy 

Traders described the central bank’s intervention on Friday as more forceful than in recent sessions. “Here, there, and everywhere,” a trader at a Mumbai-based bank said, referring to the central bank’s intervention across market segments. The central bank’s dollar sales were later supplemented by dollar-rupee buy/sell swaps, driving forward premiums lower with the 1-year implied yield down 4 basis points at 2.93%.  

Other traders pointed to seemingly firmer market intervention than seen in recent sessions. It appears the RBI wants to “show its muscle” to deter speculative positioning, but fundamental pressures point to further depreciation, a trader said. Uncertainty about how much weakness policymakers are willing to tolerate has been among the factors weighing on the rupee. 

Dollar Index at 101.38, Treasury Yields Near 4.7% Weigh on Emerging Market Currencies 

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading marginally down by 0.06% at 101.38 on Friday. US 10-year Treasury yields hovered near 4.7%, further diminishing the appeal of emerging market currencies including the rupee. Analysts noted that disruptions to oil shipments from the Gulf, combined with rising US Treasury yields, are likely to weigh broadly on Asian currencies.  

“The key market risk is whether the conflict shifts from a phase of renewed escalation to one that triggers a broader global energy shock,” they added. The dollar had experienced its sharpest weekly decline in almost three months earlier in July, driven by a weaker-than-expected US jobs report, but has since recovered ground amid heightened geopolitical uncertainty. 

FIIs Offload Rs 2,999 Crore on July 23; July Sees Improvement From June Outflows 

Foreign institutional investors offloaded equities worth Rs 2,999.23 crore on a net basis on Thursday, July 23, according to exchange data. During the session, FIIs purchased shares worth Rs 11,472.08 crore but sold shares amounting to Rs 14,471.31 crore, leading to the net outflow.  

Domestic institutional investors stepped up buying, purchasing shares worth Rs 2,947.14 crore, partially offsetting the foreign selling. The latest outflow further trimmed foreign investors’ monthly inflows. After turning net buyers in early July and accumulating more than Rs 7,100 crore at one stage, FIIs have seen much of those gains eroded amid renewed selling in the second half of the month.  

Despite the recent pullback, July has still witnessed a significant improvement from June, when overseas investors pulled out nearly Rs 49,000 crore from Indian equities. 

FIIs Net Sell Rs 819 Crore on July 22; DIIs Also Net Sellers At Rs 418 Crore 

On July 22, foreign institutional investors turned net sellers in Indian equities, offloading shares worth Rs 819.20 crore, while domestic institutional investors also remained net sellers, selling equities worth Rs 418.26 crore. In the current week, foreign investors were sellers in two out of three sessions, net offloading Rs 290 crore worth shares, while DIIs were net buyers to the tune of Rs 237 crore. With this selling, overseas investors remained net sellers to the tune of Rs 4,837 crore for the month, far lower compared to June’s massive outflows. 

Year-to-Date FII Outflows At Rs 3.51 Lakh Crore; DIIs Infuse Rs 4.84 Lakh Crore 

On a year-to-date basis, FIIs remain net sellers, having withdrawn around Rs 3.51 lakh crore from Indian equities, while DIIs have infused nearly Rs 4.84 lakh crore into domestic equities. Foreign investors have pulled out a net Rs 2.6 lakh crore from Indian equities so far in 2026, exceeding the Rs 1.66 lakh crore withdrawn in the same period of 2025. Despite the recovery in July, FPIs remain net sellers for the year, withdrawing around Rs 2.6 lakh crore from Indian stocks thus far in 2026. 

HSBC Flash India PMI Falls To 54.3, Slowest Expansion Since March 2022 

Economic data released during the week added to the pressures on the rupee. The HSBC Flash India Composite PMI Output Index fell to 54.3 in July from 57.1 in June, signalling the slowest expansion in private sector activity since March 2022.  

The services PMI business activity index dropped sharply to 53.1 in July from 57.4 in June. The headline HSBC Flash India Manufacturing PMI eased marginally to 53.9 in July from 54.2 in June, indicating a slower improvement in overall factory conditions. With oil prices climbing again, sustained gains could inflate India’s fuel import bill, putting pressure on the rupee and adding to imported inflation for the world’s third-largest oil importer. 

Brent Crude Correlation At 0.9; Analysts Warn Of 97.50 In Near Term 

The rupee’s vulnerability to oil price movements was underscored by its 15-day correlation with Brent crude reaching 0.9. The renewed escalation in the Iran conflict has driven oil prices up more than 25% this month, leaving the rupee increasingly vulnerable as higher energy costs threaten to lift India’s inflation and widen the current account deficit.  

“With Brent near $100 and geopolitical risks still elevated, USDINR is expected to move beyond the 97.00 level, with 97.50 likely in the near term,” said Amit Pabari, managing director at FX advisory firm CR Forex. India, which meets nearly 90% of its crude requirements through imports, is particularly vulnerable to oil shocks. 

USD-INR Expected to Trade In 96.30-96.85 Range; RBI Support at Lower Levels 

Analysts expects the rupee to trade with a negative bias on further escalation in tensions between the US and Iran. Elevated crude oil prices may also pressure the rupee, though diplomatic talks between the two nations may prevent a sharp fall, he said. Any intervention by the RBI may also support the rupee at lower levels, with the USD-INR spot price expected to trade in a range of Rs 96.30-96.85. If crude declines next week, it can further help the rupee to stabilise, noted analysts. The RBI says it intervenes only to curb excessive volatility, and economists expect the central bank will continue to hold interest rates unchanged in August. 

The past week’s currency market underscored the rupee’s vulnerability to geopolitical tensions, with crude oil prices driving movements. RBI intervention helped prevent sharper depreciation, but pressure from higher oil prices and foreign fund outflows persists. Markets will closely watch crude prices, geopolitical developments, and the RBI’s actions in the coming week. 

Source 

https://rbi.org.in/