Rupee Slips 0.1% for Week; Hits One-Month Low of 95.60 as US-Iran Strikes Fuel Oil Surge

Mumbai, July 11: The Indian rupee endured a volatile week of trade, oscillating sharply between gains and losses as geopolitical tensions in West Asia, crude oil price movements and shifting US interest rate expectations dictated the currency’s trajectory. The local unit opened the week on a weak note, depreciating to a one-month low mid-week after US President Donald Trump declared the temporary ceasefire with Iran “over,” triggering a surge in oil prices.  

However, suspected intervention by the Reserve Bank of India, a pullback in crude prices and a weaker dollar helped the rupee recover some lost ground towards the end of the week. For the week ended 10 July, the rupee slipped 0.1% , ending at 95.3250 per dollar. The currency traded in a broad range of 94.94 to 95.60 during the week. 

Rupee Opens Flat at 95.23 on Monday as Asian Currencies Struggle Amid Risk Aversion 

The Indian rupee opened unchanged on Monday, 6 July, after recent market movements suggested it might come under further pressure, while struggling Asian currencies added to the weak outlook. The rupee opened flat at 95.23 against the US dollar, compared to Friday’s close of 95.22.  

However, the currency depreciated by 25 paise during the session to close at 95.43 against the US dollar. The decline came as dollar demand from importers and oil companies kept the greenback well bid, offsetting some positive cues from softer crude prices. Foreign institutional investors purchased equities worth ₹243.03 crore on a net basis on Monday, according to exchange data. 

Rupee Rallies 48 Paise to 94.95 on Tuesday as Saudi Arabia Slashes Oil Prices by $11 Per Barrel 

The rupee staged a sharp recovery on Tuesday, 7 July, appreciating 48 paise to close at 94.95 (provisional) against the US dollar. The rally was driven by improved global risk sentiments after Saudi Arabia slashed August crude oil prices for Asia by $11 per barrel — the highest cut in the last 26 years.  

The positive factor for the Indian rupee was the Saudi price cut amid improving supply conditions, said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP. Higher traffic flows through the Strait of Hormuz also reduced supply uncertainties, supporting risk appetite. 

During the session, the rupee opened at 95.33 and traded in a range of 94.94 to 95.37. The dollar index was trading at 100.96, up 0.11% , while Brent crude was trading higher by 1.19% at $72.85 per barrel. The rupee has depreciated 0.4% in the fiscal year so far. Softness in Brent oil prices eased inflationary pressures for India, the world’s third-largest oil importer. 

Rupee Opens 20 Paise Lower at 95.17 on Wednesday as Trump Declares Iran Truce “Over” 

The rupee came under intense pressure on Wednesday, 8 July, opening 20 paise weaker at 95.17 per US dollar compared with Tuesday’s close of 94.97. The sharp depreciation came as rising crude oil prices and higher US Treasury yields weighed on investor sentiment. US President Donald Trump told reporters at a NATO summit that the temporary ceasefire with Iran was “over” and that continued negotiations were a “waste of time,” sending oil prices soaring. 

Oil prices jumped about 6% on Wednesday, hitting a two-week high after Trump’s remarks, renewing fears of disruptions to Middle East oil supplies. Brent crude climbed above $76 a barrel after extending gains from the previous session. The 10-year US Treasury yield rose to 4.565% , its highest level in nearly a month, while the dollar index moved above 101, putting additional pressure on emerging-market currencies. Indian stocks fell 2% , their steepest drop in over three months, and the yield on the 10-year bond rose 8 basis points. 

Rupee Hits One-Month Low of 95.60 as Oil Surge Fuels Geopolitical Risk Premium 

The rupee dropped to its weakest level in nearly a month on Wednesday, touching a low of 95.60, its weakest since June 11. The currency closed at 95.5550 per dollar, down 0.6% on the day. The rupee had declined by 52 paise to settle at 95.48 against the US dollar on Wednesday.  

Traders said the Reserve Bank of India had likely intervened in the foreign exchange market to limit the rupee’s fall via dollar sales from state-run banks. “Oil prices (are) squarely where the focus will be in the near term, alongside any signs of broad strengthening in the dollar,” said Dhiraj Nim, economist and FX strategist at ANZ. “Long as oil prices remain elevated, INR is likely to face pressure”. 

Higher oil prices are a key risk for net energy importer India, and a sustained rise threatens to slow growth and lift inflation. A trader at a Mumbai-based bank noted: “Just when it looked like the macros are improving, Middle East uncertainty is back on the table”. The USD/INR pair climbed to around 95.60, its highest level this month, as markets priced in a fresh geopolitical risk premium. 

Rupee Opens Flat at 95.55 on Thursday as US-Iran Hostilities Reignite Oil Concerns 

The Indian rupee opened flat at 95.55 against the US dollar on Thursday, 9 July, as renewed hostilities between the US and Iran reignited concerns over a spike in crude oil prices. Brent crude, after surging more than 8% over the previous two sessions, climbed another 1% during Asian trading after the US military launched fresh strikes on Iran, prompting retaliatory attacks by Iran on Kuwait and Bahrain. The impact of rising crude prices on the rupee had eased in recent weeks, but the latest escalation in the Middle East brought those concerns back into focus. 

Rupee Appreciates 7 Paise to 95.41 as RBI Intervention and Dollar Sales Provide Support 

Despite the challenging backdrop, the rupee appreciated by 7 paise to settle at 95.41 (provisional) against the US dollar on Thursday. The recovery came as suspected RBI intervention provided support to the local unit, while elevated crude oil prices and a stronger dollar weighed on it. At the interbank foreign exchange market, the rupee opened lower by 4 paise at 95.52 and traded in the range of 95.58 to 95.28 during the day. 

“The rupee appreciated today after coming under pressure yesterday. The Reserve Bank of India’s intervention supported the rupee while state-owned banks sold dollars, widely believed to be on behalf of the RBI,” said Anil Kumar Bhansali. The intervention helped the rupee break through the 95.50 level and maintain gains through the session. 

RBI’s Likely Dollar Sales Capped Further Losses Amid Elevated Oil Prices 

The central bank’s likely intervention through dollar sales in both spot and forward markets capped further losses for the rupee. Asian currencies were mostly firmer, while the dollar index hovered near the 101 mark. Volatility expectations for the rupee increased slightly after recent Middle East fighting, with the 1-month implied volatility rising to 5.3% from 4.9% at the end of last week. However, traders reckoned that one-way rupee depreciation wagers were unlikely to pile up after policymakers rolled out steps to shore up dollar flows into the economy. Brent crude futures were trading at $78.40 per barrel, higher by 0.46%. The US launched new airstrikes against Iran on Thursday, and Tehran responded by targeting Gulf countries in an exchange of fire that threatened an interim deal intended to help end the war. Foreign institutional investors purchased equities worth ₹1,962.80 crore on a net basis on Wednesday. 

Rupee Opens 13 Paise Higher at 95.26 on Friday as Soft Oil and Weak Dollar Boost Sentiment 

The Indian rupee opened 13 paise higher at 95.26 against the US dollar on Friday, 10 July, supported by softer crude oil prices and a broadly weaker US dollar. The rupee strengthened to 94.46 against the US dollar due to falling crude oil prices. The currency gained as US President Donald Trump said Iran wants to make a deal, leading to a rise in risk appetite in global markets and a softening of the US dollar. 

Rupee Settles 9-14 Paise Higher at 95.38 as Greenback Weakens and Equities Rally 

The rupee rose 9 paise to settle at 95.38 against the US dollar on Friday. At the interbank foreign exchange market, the rupee opened at 95.27 and traded in the range of 95.22 to 95.42. Another report indicated the rupee rose 14 paise to settle at 95.33 (provisional). The greenback weakened but crude oil prices steadied amid intensifying tensions in West Asia. Positive sentiment in the domestic equity markets also supported the local currency. The BSE Sensex jumped 827.57 points (1.08%) to close at 77,569.39, while the Nifty surged 244.10 points (1.02%) to settle at 24,206.90. FII outflows and uncertainties over fresh tensions in West Asia weighed on the local unit, while positive sentiment in the domestic equity markets provided support. 

Forex Reserves Jump $7.26 Billion to $674.19 Billion During Week Ended July 3 

The Reserve Bank of India on Friday said the country’s forex reserves jumped $7.26 billion to $674.193 billion during the week ended July 3. In the previous reporting week, the forex kitty had dropped by $5.654 billion to $666.933 billion. The dollar index was trading at 100.86, down 0.04% , while Brent crude was trading lower by 0.62% at $75.83 per barrel. Foreign institutional investors purchased equities worth ₹2,603.72 crore on a net basis on Friday. 

RBI Faces $100 Billion Unwinding Challenge After Record Currency Defence 

The Reserve Bank of India faces a $100 billion challenge after its record currency defence, with the rupee weakening 0.8% during the period, making it the only currency in emerging Asia to depreciate against the dollar. Claudio Piron, head of Asia FX and rates strategy at BofA Global Research, estimates the rupee at 98 per dollar by the end of 2026, reflecting expectations of three US rate hikes totaling 75 basis points, which would bolster the dollar. In 2026 so far, the rupee has declined 6.3% . Over the past year, it depreciated 10.2%. So far in the calendar year, the rupee depreciated 6.13% . Over the last year, the rupee declined 10%. 

Inflation Data and Importer Demand in Focus Next Week 

Investor focus next week will be on consumer inflation prints in India and the US. ANZ expects India’s retail inflation to rise to 4.3% year-on-year, in line with forecasts of economists polled by Reuters. For the rupee, merchant dollar demand will be a key driver, with analysts expecting importers to hedge aggressively while exporters may stick to an opportunistic approach. 

The rupee’s weekly performance was dictated by the collapse of the US-Iran ceasefire and the consequent surge in crude oil prices. The currency touched a one-month low of 95.60 before suspected RBI intervention and a pullback in oil prices helped it recover some ground. With the rupee trading in the 95.10-95.80 range and the dollar index above 100, market participants are closely monitoring geopolitical developments, upcoming US and India inflation data, and the RBI’s intervention strategy for further direction on the currency’s near-term trajectory.

Source 

https://rbi.org.in/