Weekly Rupee Review, August 10-14, 2026: Rupee Holds Steady Near 95.40 as RBI Intervention and Oil Volatility Define Week

Mumbai, Aug 15: The Indian rupee concluded the trading week on a remarkably stable note, holding near 95.40 against the US dollar, as persistent intervention by the Reserve Bank of India (RBI) successfully anchored the currency within its narrowest weekly trading band since February.  

The rupee opened at 95.40 on Friday, virtually unchanged from its previous close, and traded in a tight range throughout the session. For the week, the currency oscillated within a band of less than 30 paisa, ranging between 95.17 and 95.4450 per dollar, marking one of the most subdued weekly performances in recent months.  

The stability came despite significant headwinds from elevated crude oil prices above $87 per barrel, persistent geopolitical tensions over the Strait of Hormuz, and mixed signals from global currency markets. 

Rupee Opens Flat at 95.40 as RBI Intervention Shields Currency from Oil-Led Pressures 

The rupee began the week on Monday at 95.36 against the US dollar, declining 6 paise from its previous Friday’s close. The weakness was attributed to rising crude oil prices, with Brent crude trading near $90 per barrel amid fading hopes of a quick US-Iran agreement and reopening of the Strait of Hormuz.  

Forex traders noted that oil companies continued to purchase US dollars for their daily requirements, exerting downward pressure on the rupee. However, the RBI’s consistent intervention through state-run banks, selling dollars in the spot market, helped limit the currency’s losses. On Tuesday, the rupee settled at 95.36, down another 6 paise, as Brent crude pushed toward $90 per barrel. The dollar index remained largely unchanged at 99.83, providing little directional cue. 

Rupee Gains 3 Paise to 95.33 on Wednesday as DIIs Step Up Buying 

Wednesday brought a modest respite for the rupee, which strengthened 3 paise to close at 95.33 (provisional) against the US dollar. The uptick came as domestic institutional investors (DIIs) stepped up buying in Indian equities, recording net purchases of ₹5,841.66 crore on Wednesday.  

Foreign institutional investors (FIIs), however, turned net sellers after a three-session buying streak, with net outflows of ₹1,002.50 crore. The combined net institutional inflow stood at ₹4,839.16 crore, providing some support to the rupee. The rupee’s gains were also aided by dollar sales from state-run banks, most likely on behalf of the RBI, which kept a lid on losses.  

However, caution heading into key US and India inflation prints and worries over higher oil prices contained the room for further gains. 

Rupee Holds 95.33 on Thursday as WPI Inflation Eases to 9.78% 

On Thursday, the rupee held steady at 95.33, supported by continued RBI intervention and a marginal easing in India’s wholesale price inflation. Data released on Friday showed that India’s Wholesale Price Index (WPI) inflation moderated to 9.78% in July from 9.87% in June, slightly below market expectations of 9.95%.  

The easing was driven primarily by a moderation in fuel and power group inflation, which softened to 20.05% from 27.41% in June. However, food inflation accelerated to 8.52% from 7.0%, and manufactured products inflation rose to 8.29% from 7.48%.  

The data provided some relief to policymakers, though wholesale inflation remained elevated at near-decade highs. Meanwhile, India’s retail inflation for July was expected to rise to 4.5%, up from 4.38% in June, remaining within the RBI’s 2%-6% tolerance band. 

Friday’s Flat Open at 95.40 as RBI Defends 95.50 Psychological Level 

Friday saw the rupee open flat at 95.40, with traders reporting that the RBI likely intervened in the foreign exchange market to support the currency. Three traders indicated that the central bank sold dollars in the spot market, helping the rupee successfully defend the 95.50 psychological level, a key threshold that had been under pressure throughout the week.  

The intervention came amid heightened Middle East conflict uncertainty, which kept risk appetite subdued and oil prices elevated. The rupee traded in a narrow range of 95.40-95.43 during the session, with the dollar index hovering just below the 100 mark at 99.62-99.77.  

The US 10-year Treasury yield climbed to 4.69%, while the dollar index reclaimed the 100 mark earlier in the week before retreating. 

Dollar Index Falls Below 100 as Soft US Inflation Data Dampens Rate Hike Bets 

The US dollar index played a significant role in shaping the rupee’s trajectory during the week. The index, which measures the greenback against a basket of six major currencies, fell past 99.6 on Friday, approaching the two-month low of 95.53 touched on 7 August.  

The decline was driven by soft US inflation data, which reduced bets of a Federal Reserve rate hike. US Producer Price Index (PPI) data showed stagnation in July, reinforcing expectations that the Fed would keep rates on hold at its September meeting.  

The probability of a September rate hike declined to approximately 35% , according to LSEG data. The CME FedWatch Tool showed the probability of the Fed maintaining policy rates in September rising to nearly 65% , a sharp reversal from a month earlier when markets were pricing in two rate hikes. The dollar index opened the week at 99.70 on Monday and traded in a range of 99.62-99.96 throughout the week. 

Crude Oil Volatility: Brent Holds Above $87 as Supply Risks Offset Demand Concerns 

Crude oil prices remained a critical driver of rupee movement throughout the week. Brent crude futures for October delivery traded at $86.77 per barrel on Friday, while WTI crude traded at $80.92. Oil prices rose more than 40% so far in 2026, fuelled by the US-Iran war that began in late February.  

On Monday, Brent futures rose 4.99% to settle at $87.72, while WTI gained 4.98% to reach $82.16. By Wednesday, Brent had pushed toward $89 per barrel as Strait of Hormuz talks stalled. However, the rally came to an abrupt halt on Thursday when Brent plunged 2.15% to settle at $87.07.  

The volatility in oil prices kept importers’ dollar demand elevated, with oil refiners particularly inclined to buy dollars on any dip in the USD/INR pair. India, which imports approximately 90% of its oil, remains highly vulnerable to such supply disruptions. 

FII and DII Flows: Domestic Institutions Step Up as Foreign Flows Turn Volatile 

Institutional flows into Indian equities exhibited significant volatility during the week, influencing the rupee’s movement. On Monday, FIIs remained net buyers for a third straight session, while DIIs continued their buying streak. Tuesday saw FIIs purchase equities worth ₹258.55 crore on a net basis.  

However, Wednesday marked a reversal, with FIIs turning net sellers to the tune of ₹1,002.50 crore, while DIIs stepped up with net purchases of ₹5,841.66 crore. Thursday saw DIIs record their highest daily net purchase in August at ₹4,353.09 crore, while FIIs recorded net selling of ₹510.69 crore.  

On Friday, FIIs reversed course again, turning net buyers of ₹508.12 crore on a provisional basis, while combined FII and DII net buying stood at ₹864.52 crore. Despite the recent buying, FIIs remained net sellers on a year-to-date basis, having withdrawn approximately ₹3.39 lakh crore from Indian equities so far in 2026. 

India’s Forex Reserves Surge $14.1 Billion to $707 Billion, Crossing Key Milestone 

In a significant development, India’s foreign exchange reserves surged by $14.136 billion during the week ended 7 August to reach $707.002 billion, crossing the $700 billion mark. The reserves have climbed for five straight weeks as the RBI’s measures helped bring in $40.8 billion through a mix of foreign currency deposits from its diaspora and overseas borrowings since early June.  

The stockpile rose by $10.5 billion to $692.9 billion in the week ended 31 July. In rupee terms, the reserves increased by ₹1.20 lakh crore to ₹67.32 lakh crore. The RBI has stated that India’s foreign exchange reserves continue to be adequate in terms of standard metrics of reserve adequacy, with import cover of over 10 months and external debt cover of 90.8%. 

Technical Levels: 95.50 Becomes Key Support as Upside Resistance at 96.00 

From a technical perspective, the USD/INR pair traded near its 20-day exponential moving average, reflecting volatility contraction. The relative strength index (RSI) hovered around 48, indicating neutral momentum.  

On the upside, major resistance was seen near 96.00, around the 29 July high, followed by the record high of approximately 97.10. On the downside, the first support lay at the rising trendline near 95.36, with a decisive break below that level potentially exposing the pair to the 26 June low of 94.15.  

Forex traders identified 95.50 as the immediate level to watch, followed by 95.80-96.00 if oil remained elevated. The rupee’s record low of 96.96 was hit in May, and traders noted higher chances of the rupee falling to 95.80 than strengthening to 95. 

Market Sentiment: Geopolitical Uncertainty and Oil Prices Keep Traders Cautious 

Market sentiment throughout the week remained cautious, with traders in wait-and-watch mode ahead of key US and India inflation data. The geopolitical standoff over the Strait of Hormuz continued to underpin oil prices, while the US threat of an indefinite naval blockade of Iran kept supply risks elevated.  

Reports of attacks on shipping renewed concerns about physical supply, while markets grew increasingly sceptical about a quick US-Iran agreement. The dollar received some support from elevated oil prices but remained limited by expectations that inflation may continue to moderate. Analysts noted that higher oil prices could drag on India’s economic growth and government investment spending while pushing up inflation in the near term. 

The rupee’s remarkable stability during the week, trading within its narrowest weekly band since February, was primarily attributable to sustained RBI intervention, which successfully defended the 95.50 psychological level against persistent oil-driven dollar demand. The currency’s trajectory was shaped by competing forces: elevated crude prices and geopolitical uncertainty weighed on the rupee, while a softening dollar index below 100 and robust domestic institutional flows provided support. India’s forex reserves surging past $707 billion reinforced the RBI’s capacity to manage volatility. The weekly range of 95.17-95.4450 and the successful defence of key support levels underscored the central bank’s commitment to currency stability amid challenging global conditions.