Rupee Ends Week Nearly Flat at 95.71 Despite Crude Surge and Geopolitical Turmoil 

Mumbai, Aug 22: The Indian rupee exhibited remarkable resilience during the week ended 21 August 2026, weathering a sharp surge in crude oil prices and escalating geopolitical tensions in West Asia to close nearly flat against the US dollar.  

The domestic currency ended the week at 95.71 against the greenback, down a marginal 0.3% for the week, thanks to sustained intervention by the Reserve Bank of India (RBI) and a broadly weaker dollar overseas.  

The rupee’s ability to hold firm near the 96 level, despite Brent crude climbing above $94 per barrel, underscored the central bank’s commitment to maintaining orderly currency movements. 

Rupee Opens Week at 95.61 as Crude and FII Selling Weigh Heavy 

The rupee commenced the week on a weak footing, depreciating 19 paise to close at 95.61 against the US dollar on Monday, 17 August. The currency came under pressure from multiple fronts — elevated crude oil prices, lingering geopolitical tensions in West Asia, and heavy selling by foreign institutional investors. 

Foreign institutional investors offloaded equities worth ₹2,535.10 crore on Monday, marking their highest single-day selling in three weeks. The selling spree reflected growing risk aversion among global investors amid the intensifying US-Iran conflict and the near-blockade of the Strait of Hormuz, which had pushed Brent crude above $90 per barrel. 

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.60, down marginally by 0.04%. However, the modest decline in the dollar was insufficient to offset the negative sentiment surrounding the rupee, as persistent demand for dollars from importers and oil marketing companies kept the local currency under pressure. 

Rupee Sheds Another 7 Paise to Close at 95.68 

The rupee extended its losses on Tuesday, 18 August, depreciating another 7 paise to close at 95.68 (provisional) against the US dollar. The currency opened at 95.68 and traded in a narrow range of 95.64-95.69 during the session before settling at the day’s opening level. 

Forex traders noted that the USD/INR pair was likely to trade with a slight negative bias, pressured by the delay in a peace deal between the US and Iran, rising crude oil prices, and broader dollar support. Brent crude was trading higher by 0.01% at $90.88 per barrel in futures trade, while the dollar index remained subdued at 99.60. 

The broader market weakness also weighed on the rupee, with the Sensex tanking 492.70 points to settle at 77,235.46, while the Nifty fell 132.75 points to close at 24,154.90. The sustained selling by foreign institutional investors, who offloaded equities worth ₹2,535.10 crore on Monday, continued to dampen sentiment. 

According to analysts, with Brent crude rising above $90 per barrel and the reopening of the Strait of Hormuz remaining unresolved, oil prices would remain a key monitorable for the rupee, inflation, and foreign flows. Elevated crude prices, geopolitical uncertainty, and foreign selling were likely to keep near-term sentiment subdued. 

Currency Loses 24 Paise or 0.25% Over Past Week 

A weekly analysis published on 18 August noted that the rupee had weakened over the past week, losing about 24 paise, or 0.25%, against the dollar. The local currency faced pressure as foreign portfolio flows turned negative and crude oil prices continued to rise. 

According to NSDL data, foreign portfolio investors registered a net outflow of about $207 million over the past week. Nevertheless, cumulative flows for August remained positive, with a net inflow of about $1.8 billion so far that month. Crude oil prices emerged as a more significant headwind for the rupee, with Brent crude futures rising for the second consecutive week. After gaining close to 6% the previous week, Brent crude was up another 2.5% so far this week and was trading around $91 per barrel. 

A sustained rise in crude prices is negative for the rupee as it increases India’s import bill and demand for dollars. The recent reversal in foreign flows, although modest, also took away some of the support that the local currency had seen earlier in the month. Therefore, with crude oil prices firming and foreign flows turning marginally negative, the near-term fundamental backdrop had become less supportive for the rupee. 

Rupee Pares Gains, Settles 1 Paisa Lower at 95.74 

On Thursday, 20 August, the rupee pared initial gains and settled for the day down 1 paisa at 95.74 against the US dollar. The currency had opened stronger but gave up its gains as the session progressed, reflecting the persistent pressure from elevated crude oil prices and geopolitical uncertainty. 

Foreign institutional investors offloaded equities worth ₹583.36 crore on a net basis on Thursday. The selling, though significantly lower than Monday’s exodus, indicated that foreign investors remained cautious amid the unresolved US-Iran conflict. 

On the domestic macroeconomic front, the government amended certain provisions of the Foreign Trade Policy to make it easier for exporters to invoice overseas sales and receive payments in Indian rupees. The amendments cover exports to all countries, although the rules vary by destination. For countries outside the Asian Clearing Union, export contracts and invoices may now be denominated in any foreign currency or Indian rupees. Earlier, export earnings generally had to be received in a freely convertible currency. The move was seen as a step towards promoting the internationalisation of the rupee. 

Rupee Opens Higher at 95.65, Settles Flat at 95.71 

The rupee opened the final trading session of the week on a positive note, gaining 9 paise to 95.65 against the US dollar in early trade on Friday, 21 August, supported by the weakening of the American currency in overseas markets. At the interbank foreign exchange, the rupee opened at 95.69, then rose to 95.65, higher by 9 paise from its previous close. 

However, the rupee pared its initial gains and settled on a flat note, higher by just 3 paise at 95.71 (provisional) against the US dollar, as the support from a weak dollar was negated by continued geopolitical tensions. Forex traders said the Indian rupee traded flat to positive on a weak dollar and a positive tone in the domestic markets. However, the rupee pared initial gains as geopolitical tensions continued to simmer. 

At the interbank foreign exchange, the rupee opened at 95.69, then touched an intraday high of 95.65 and a low of 95.75, finally settling for the day at 95.71 (provisional) against the greenback. Brent crude, the global oil benchmark, was trading lower by 0.42% at $93.39 per barrel in futures trade, as the geopolitical situation in the Middle East remained tense. On the domestic market front, the Sensex edged up 3.11 points to settle at 77,540.83, while the Nifty settled 20.15 points higher at 24,252. 

The rupee opened 7 paise higher at 95.64 against the dollar in early trade on Friday, supported by the RBI’s continuous intervention and a weaker dollar, though rising crude prices and consistent importer hedging threatened sentiment. The local currency was trading at ₹95.64 per dollar, as compared to ₹95.71 per dollar in the previous trading session. The RBI had kept an eye on any sudden movement in the rupee to prevent any such sharp depreciation, with the rupee moving only in a narrow range for the past week. 

RBI Intervention and Dollar Weakness Help Rupee Hold Below 96 Despite Oil Pressure 

The Reserve Bank of India (RBI) stepped up intervention across foreign exchange market segments to prevent the rupee from breaching the psychologically important 96-per-dollar level amid elevated crude prices and corporate hedging demand. Outstanding positions in dollar-rupee futures expiring next week tripled over the past fortnight to more than $3.7 billion, indicating increased central bank activity. The RBI’s intervention has been supported by foreign currency inflows under measures announced in June. Around $56.85 billion has been mobilised so far, including $52.3 billion through FCNR(B) deposits, against the RBI’s expectation of at least $80 billion. 

However, the inflows have yet to translate into significant rupee appreciation. The RBI’s net forward dollar liabilities stood at $103.3 billion at end-June, although Governor Sanjay Malhotra described the position as manageable. 

The rupee also received support from dollar weakness, with the dollar index falling to 98.74, its lowest level since May. The decline followed an announcement by the US Treasury to double the size of its long-term bond buyback programme, which pushed longer-term Treasury yields lower and reduced pressure on emerging-market currencies. 

Against other major currencies, the rupee weakened modestly. On 21 August, EUR/INR opened at 111.8853, up 0.10%, while GBP/INR opened at 130.5615, rising 0.11%. JPY/INR opened at 0.6021, up 0.08%. The mixed currency movements indicated measured pressure on the rupee despite persistent external headwinds. 

The rupee demonstrated remarkable stability during the week ended 21 August, ending nearly flat at 95.71 despite Brent crude surging above $94 per barrel and escalating US-Iran tensions. The RBI’s sustained intervention across market segments prevented the currency from breaching the 96 level, while a weaker dollar overseas provided additional support. The central bank’s foreign currency mobilisation measures, expected to bring in at least $80 billion, have bolstered its intervention capacity. However, elevated crude prices and persistent geopolitical uncertainty continue to pose risks, with the rupee’s response to global cues becoming increasingly muted amid the RBI’s heavy presence in the market. 

Source 

• https://rbi.org.in/