The Indian rupee is expected to open little changed on Tuesday, trading in the ₹94.37-94.69 range, as the currency continues to face pressure from multiple factors. According to Investing.com India, the rupee traded in a narrow range wedged between sustained market intervention by RBI and a rise in oil prices. The rupee settled at ₹94.4850 to the dollar on Monday, demonstrating the currency's resilience despite ongoing challenges. The rupee's move from around ₹95.70 to ₹94.50 has lost momentum, with rising oil prices and renewed importer hedging putting a brake on further gains. Importers have used the rupee's recovery to lock in dollar requirements, while the prospect of costlier crude keeps demand for hedging high. The Reserve Bank of India, which helped drive the initial rally through persistent dollar sales, remains present in the market, with its role shifting toward absorbing pressure from oil and higher US Treasury yields rather than actively pushing the rupee higher. As per The Hindu BusinessLine, the RBI is quite active around the 94.50 level for now, with oil and importer demand making it harder to push dollar/rupee lower.
Oil prices inched up on Tuesday, with Brent crude near $97 a barrel as escalating US-Iran tensions and threats to Gulf energy infrastructure raise the risk of supply disruptions through the Strait of Hormuz. As reported by The Hindu BusinessLine, Brent crude had rallied nearly 8 per cent last week, demonstrating the sustained pressure on energy markets. Goldman Sachs raised its Brent forecasts by $5 a barrel, to $85 for December 2026, and to $80 for 2027, assuming West Asia shipping disruptions persist into next year. Risks to the forecasts remain significantly skewed higher, particularly in the near term, with Brent potentially climbing to $120 in its upside scenario. Iran said it will announce a new restricted zone in the Persian Gulf in the coming days, along with maps of a new shipping corridor through the Strait of Hormuz, stoking fresh concerns over energy flows. However, Iran said that the deal with Oman regarding the Strait of Hormuz is in its final stages, which may ease crude oil prices and further support the rupee.
The Indian rupee closed at ₹94.50 per dollar on Monday, down 7 paise from its previous close, demonstrating the impact of mounting pressures despite continued central bank support. According to CNBC TV18, the rupee traded in a range of about 10 paise throughout the session, with bankers pointing to consistent dollar sales from state-run banks, most likely on behalf of the RBI. The RBI sold at least $8 billion to bolster the rupee last week, continuing the intervention pattern that has anchored the currency over the last two weeks. The rupee spent the session in a 10-paisa trading range, with the Reserve Bank of India selling dollars to maintain the currency's value. As per CR Forex Advisors MD Amit Pabari, the rupee entered the week on a stronger footing, supported by heavy FCNR-related dollar inflows, though global headwinds remain a challenge with 94.00–94.20 remaining the key support zone. According to Mirae Asset ShareKhan, "The Indian rupee traded flat to positive on foreign inflows and a soft dollar. However, a weak tone in domestic markets and a surge in crude oil prices capped sharp gains."
Indian shares ended lower on Monday, with SENSEX settling 382.62 points lower at 76,132.81, while NSE Nifty 50 fell 118.55 points to finish at 23,779.15, according to CNBC TV18. Indian shares ended lower on Monday, with rising U.S. bond yields and escalating Middle East tensions weighing on investors' appetite for risk. Foreign institutional investors (FIIs) offloaded equities worth ₹3,111.94 crore on a net basis on Friday, according to exchange data. Long-dated global government bond yields reached new highs today as the release of much stronger-than-expected U.S. jobs data boosted the odds of a September rate hike by the Federal Reserve. India's forex reserves jumped $11.475 billion to a new all-time high of $740.803 billion during the week ended August 28, the RBI said on Friday, providing a strong backdrop for currency stability despite current volatility.
Traders have priced in a roughly 57% chance the Federal Reserve will hike rates this month, following stronger-than-expected US jobs data. As reported by The Economic Times, US nonfarm payrolls increased by 162,000 last month, well above economists' estimate of 56,000, with the previous month's payroll figure also revised higher. Long-dated global government bond yields reached new highs today as the release of much stronger-than-expected U.S. jobs data boosted the odds of a September rate hike by the Federal Reserve. Analysts at ING reckon that higher energy prices and limited current market pricing of interest rate hikes by the Federal Reserve could lend some support to the dollar in the near term. The focus now turns to inflation data from the US and India, which could influence both Federal Reserve policy decisions and domestic currency movements. Market focus now shifts to upcoming inflation data releases, with the central bank's continued support for the rupee helping absorb pressure from higher oil prices and stronger dollar outlook.
