The Indian rupee closed at ₹95.59 against the US dollar on Tuesday, gaining around 0.2% as lower crude oil prices and intervention by the Reserve Bank of India helped limit pressure on the currency.
The rupee had closed at ₹95.8150 on Monday.The currency moved within a narrow range during Tuesday’s session as traders watched developments in global oil markets and signs of possible diplomatic engagement between the United States and Iran.
The decline in crude prices provided some support to the rupee, while continued dollar demand from importers limited its gains.
Brent crude fell sharply during the day, reaching a two-week low as markets responded to reports that Iran could consider reopening the Strait of Hormuz under certain conditions. The waterway is a major route for global oil and gas shipments.
Rupee Gains as Oil Prices Retreat
The rupee opened Tuesday at around ₹95.75 per dollar, compared with Monday’s close of ₹95.8150.
It strengthened further during the session before ending at ₹95.59.The improvement came as crude prices moved lower after several sessions of elevated prices.
Lower oil prices generally reduce the cost of India’s imports because the country relies heavily on overseas crude supplies.
Brent crude futures fell by about 2% to $98.33 a barrel, while US West Texas Intermediate contracts also declined.
Reuters attributed the fall partly to expectations that oil supplies through the Gulf could improve.
Despite the decline, oil prices remain closely watched by Indian markets because sustained increases can put pressure on the country’s import bill and the rupee.
RBI Intervention Remains in Focus
The Reserve Bank of India’s activity in the foreign-exchange market also remained a major factor for traders.
Reuters reported that state-run banks sold dollars during Tuesday’s session, while market participants also observed signs of RBI intervention through foreign-exchange transactions.
The central bank has been using a combination of spot-market operations and swaps as it manages pressure on the currency.
The RBI has faced a difficult balance between supporting the rupee and managing liquidity in the banking system.Its recent operations have included foreign-exchange swaps and government bond sales.
These measures have also reduced the banking system’s liquidity surplus significantly.
Foreign Inflows Provide Some Support
Foreign-currency inflows have also become an important factor for India’s currency market.
According to RBI data reported this week, banks raised around $133 billion through the central bank’s foreign-currency non-resident deposit scheme.
Total inflows from the relevant capital measures had reached around $143.6 billion by September 18, according to Indian market reporting.
The inflows have increased the supply of foreign currency in the domestic market.
However, traders continue to monitor demand from importers and other businesses that need dollars for overseas payments.
The rupee’s recent movements have therefore reflected several competing forces, including oil prices, foreign inflows, importer demand and RBI intervention.
Oil Prices Remain a Key Risk
The latest movement in the rupee comes against a volatile backdrop for global energy markets
.Brent crude had risen sharply in recent weeks as conflict in the Middle East disrupted energy supplies and raised concerns about shipments through the Strait of Hormuz.
It later declined as markets responded to reports of possible diplomatic discussions involving Iran and the United States.
The Strait of Hormuz is particularly important for India because a significant portion of the country’s crude oil requirements is imported.
Any prolonged disruption to shipments could therefore put pressure on India’s energy costs and external finances.
For now, the decline in crude prices has offered some relief to the rupee.
Traders Watch the ₹96 Level
The rupee has remained under pressure for much of September, with the currency briefly approaching the ₹96-per-dollar level in recent trading sessions.
Traders are closely watching whether the currency can remain below that level as global oil prices, US interest rates and foreign capital flows continue to influence market sentiment.
The dollar itself has also remained relatively strong, creating additional pressure on emerging-market currencies.
The immediate outlook for the rupee will depend on how oil prices move and whether foreign-currency inflows continue.
Any renewed rise in crude prices could increase demand for dollars from Indian oil importers.
For Tuesday, however, lower oil prices and RBI intervention helped the rupee finish stronger at ₹95.59 per dollar.
The currency’s next moves will likely remain closely linked to developments in global oil markets, US-Iran diplomacy and the RBI’s approach to managing volatility.
Curated news reports, in-depth analysis, and special features by India’s Opinion editorial team.
