Rupee Posts Strongest Weekly Gain in Four Months; Ends at 95.38 as RBI Intervention and FPI Inflows Offset Geopolitical Jitters 

Mumbai, August 1: The Indian rupee staged a remarkable recovery during the week ended 31 July 2026, posting its strongest weekly gain since March as a combination of aggressive central bank intervention, a weaker US dollar, softening crude oil prices, and a sharp reversal in foreign portfolio inflows lifted the currency from near-record lows.  

The rupee settled at 95.38 against the US dollar on Friday, marking a gain of approximately 1% week-on-week. This represented the currency’s best weekly performance in four months. On a monthly basis, however, the rupee slipped about 0.7% as elevated oil prices, driven by renewed hostilities in West Asia, exerted persistent pressure on the local unit. 

Rupee Logs Best Day in Over Six Weeks as Oil Plunge Triggers Stop-Losses 

The trading week began with a bang for the rupee, which recorded its best single-session gain since 12 June. The currency opened at 96.1475 against the dollar and climbed to an intraday high of 95.7950, having settled at 96.5625 in the previous session. The rally was driven by a confluence of factors: a sharp plunge in crude oil prices following a temporary pause in US-Iran hostilities, aggressive dollar selling by the Reserve Bank of India (RBI), and the triggering of stop-losses on long dollar positions. 

Brent crude fell nearly 10% during Asian trading to slip below $88 per barrel. Estimates of Monday’s intervention ranged from roughly $1.5 billion to $3 billion, with bankers saying the central bank was active in both the spot and non-deliverable forward markets. The RBI also conducted buy/sell swaps, which weighed on forward premiums. The rupee ended the day 0.7% higher, with some sources reporting a sharp appreciation of 54 paise to close at 95.99 against the dollar. 

“The recent rise in USD/INR was primarily driven by higher crude oil prices. With geopolitical concerns easing today, the rupee is expected to see a meaningful appreciation on a mean-reversion basis, especially relative to global and Asian currencies,” analysts noted. “Additionally, inflows through the FCNR(B) scheme and continued foreign investment in domestic equity markets are providing further support to the rupee.” The RBI’s measures to attract foreign currency inflows have drawn in nearly $32 billion. 

Rupee Extends Gains to Third Straight Session Despite FII Outflows 

The rupee continued its upward trajectory for a third consecutive session on Tuesday, ending 11 paise higher at 95.88 (provisional) against the dollar. The currency opened at 95.75 and touched an intraday high of 95.63 before paring some gains. Lower crude oil prices, which crashed as the US and Iran refrained from attacking each other’s targets for the third consecutive day, provided support to the local unit. Brent crude was trading 2.63% lower at $86.04 per barrel. 

However, the dollar index was trading 0.08% higher at 101.46, and foreign institutional investors (FIIs) offloaded equities worth ₹1,688.23 crore on a net basis on Monday, capping sharper gains for the rupee. 

Rupee Gains 6 Paise as Dollar Weakens Ahead of Fed Decision 

The rupee continued to strengthen, gaining 6 paise to settle at 95.76 against the US dollar on Wednesday. The currency had settled 17 paise higher at 95.82 on Tuesday after gaining 74 paise in the previous two back-to-back sessions. Markets remained cautious ahead of the US Federal Reserve’s monetary policy decision. The domestic unit has fallen 1.03% so far in July and 6.03% in 2026. 

Rupee Surges 26 Paise for Fifth Straight Session as FPI Inflows Surge 

Thursday proved to be a strong day for the rupee, which surged 26 paise to close at 95.50 against the dollar, marking its fifth consecutive session of gains. The rally was underpinned by a dramatic shift in foreign portfolio flows. During the last three days, FPIs bought equity worth ₹7,360 crore. On Thursday alone, FIIs purchased equities worth ₹3,623.51 crore on a net basis. “Rupee has been strengthening on sustained RBI dollar selling this week. The other factor contributing to the rupee’s stability and strength is the FPI inflows,” analysts noted. 

The dollar index extended its decline, trading around 100, its lowest level in nearly 15 weeks. However, geopolitical tensions escalated sharply on Thursday, with the US and Iran firing barrages of missiles against each other’s targets. Jordan intercepted Iranian missiles for the second consecutive day, while Kuwait said a strike in the northern part of the country killed one person. 

Rupee Strengthens 30 Paise to Close at 95.38, Capping Best Week in Four Months 

The rupee extended its gains on Friday, strengthening 30 paise to close at 95.38 against the US dollar. The currency opened at a three-week high of ₹95.39, up 29 paise from Thursday’s close of 95.68. During the session, it touched a high of around 95.25 before paring some gains amid dollar demand from importers. The rupee gained about 0.9% during the week, marking its strongest weekly performance in four months. 

RBI Intervention: The Central Bank’s Decisive Role in Stabilising the Currency 

The RBI played a pivotal role in the rupee’s recovery throughout the week. The central bank had sold about $7 billion to defend the rupee on the preceding Friday (24 July), in what was one of its largest direct interventions in months. The intervention, conducted across both onshore and offshore markets as the currency approached record lows, was followed by continued dollar sales over the next two sessions. 

Traders pointed to a pickup in quick but aggressive dollar sales by state-run banks, often at times when market liquidity appeared to be thinning. “The intent seems to be to find pockets to push USD/INR lower without using a large amount of firepower,” a trader at a foreign bank said. Traders said the RBI’s dollar sales near the ₹95.75-per-dollar level on Thursday signalled the central bank’s intent to cap further weakness in the currency. 

The magnitude of the dollar sales underscores the RBI’s resolve to support the rupee. The increase in the RBI’s dollar sales comes as its recent steps to boost capital flows add to the central bank’s foreign currency buffers, giving it greater ammunition to defend the rupee. The response to the measures has been robust so far, with banks mobilising $32 billion. 

Forex Reserves Surge by $6.118 Billion 

Adding to the positive sentiment, RBI data released on Friday showed that the country’s forex reserves jumped $6.118 billion to $682.354 billion during the week ended 24 July. In the previous reporting week, the overall reserves had increased by $1.08 billion to $676.237 billion. The kitty had expanded to an all-time high of $728.494 billion during the week ended 27 February this year before the onset of the Middle East conflict, which led to several weeks of a drop as the rupee came under pressure and the RBI had to intervene in the forex market through dollar sales. 

For the week ended 24 July, foreign currency assets, a major component of the reserves, increased $4.873 billion to $555.929 billion. Value of gold reserves increased $1.308 billion to $103.058 billion during the week. The Special Drawing Rights (SDRs) were down $53 million at $18.617 billion, and India’s reserve position with the IMF was also down $11 million to $4.75 billion. 

Crude Oil and Dollar Dynamics: Key External Drivers of Rupee Movement 

Crude oil prices and the US dollar index were the two primary external drivers of the rupee’s performance during the week. Brent crude, which had surged above $100 per barrel the previous week amid escalating Middle East tensions, retreated significantly following a temporary pause in hostilities. Brent was on track to rise 21% for the month and WTI 18% , snapping two straight months of declines for both benchmarks. On Friday, Brent crude oil prices fell to $87.17 per barrel from $91.38 in the previous session, easing pressure on the rupee. 

The dollar index extended its decline to around 100 on Friday, its lowest level in nearly 15 weeks, from 100.79 in the previous session. The dollar remained under pressure after the Federal Reserve’s latest policy decision reinforced expectations that US interest rates were near their peak. 

Rupee Outperforms Other Asian Currencies 

The rupee also outperformed other oil-sensitive Asian currencies, including the Indonesian rupiah and Philippine peso, during the week, largely due to the RBI’s intervention. Most Asian currencies firmed on Friday, with traders paying attention to moves in the Japanese yen and Korean won after authorities in both countries stepped in to buy their currencies, possibly with involvement from the United States. The offshore Chinese yuan strengthened past 6.75, while the South Korean won touched a high of around 1,429. 

The rupee’s sharp recovery during the week was driven by aggressive RBI intervention, a weaker dollar, softening crude prices, and a reversal in FPI flows. The central bank’s decisive action, including an estimated $7 billion intervention, signalled a clear intent to prevent excessive depreciation. However, the rupee remains vulnerable to geopolitical developments in West Asia and oil price volatility, as evidenced by the 0.7% monthly decline. The $6.118 billion jump in forex reserves to $682.354 billion provides additional buffer. Market participants should monitor RBI’s intervention strategy, FPI flow trends, and crude oil price movements, as these factors will continue to influence the currency’s trajectory in the near term. 

Source 

• https://rbi.org.in/