RBI likely intervenes to support the rupee as Middle East tensions and high crude oil prices pressure the currency. Rupee holds near ₹95.40 per US dollar.
Mumbai: The Reserve Bank of India (RBI) is believed to have intervened in the foreign exchange market to support the Indian rupee as geopolitical tensions in the Middle East and elevated crude oil prices continue to weigh on the currency.
According to market traders cited by Reuters, state-run banks were seen selling US dollars, likely on behalf of the RBI. The intervention helped the rupee remain relatively stable at around ₹95.40 per US dollar, preventing a sharper decline.
Rupee Remains Under Pressure
The rupee has remained in a narrow trading range this week, moving between approximately ₹95.17 and ₹95.4450 per dollar. Frequent RBI intervention has helped limit volatility even as demand for dollars remains strong among importers.
The currency closed at ₹95.44 per dollar on Thursday, compared with ₹95.33 a day earlier. Market participants attributed the weakness to dollar demand linked to forward-contract maturities, overseas payments and continued pressure from higher energy costs.
Middle East Conflict Raises Oil Concerns
Crude oil prices remain a key risk for the rupee. Renewed geopolitical uncertainty, including concerns surrounding the Strait of Hormuz and Iran, has kept oil prices elevated.
India imports nearly 90% of its crude oil requirements, making the economy particularly sensitive to sharp increases in international oil prices. Higher crude costs can increase India’s dollar demand and put additional pressure on the rupee.
RBI Keeps Close Watch on Currency
The RBI has intervened repeatedly in the foreign exchange market in recent weeks, with traders saying the central bank’s dollar sales have helped contain losses and discourage speculative bets against the rupee. The currency’s one-month implied volatility has also fallen to its lowest level since March.
Market participants are now watching crude oil prices, Middle East developments, foreign fund flows and the RBI’s future intervention strategy for clues about the rupee’s next move.
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