The Indian rupee fell 30 paise to 94.63 against the dollar on Monday, ending its six-day winning streak as reported by The Times of India. The currency opened at 94.42 against the dollar, down 9 paise from Friday's close of 94.33, and witnessed volatile trading during the session as it moved between 94.24 and 94.76 before settling at 94.63. The rupee was the third worst-performing Asian currency on Monday after Philippine peso and South Korean won. So far in 2026, the domestic unit has depreciated 5.37%, while over the past year, it has fallen 9.2%. Currency traders said that foreign banks were observed purchasing dollars in the market throughout the day, with dollar demand from importers and outflows linked to ICICI Asset Management Company's IPO weighed on the currency. Forex traders noted that supportive debt and deposit inflows were offset by a firm dollar and the lack of clarity over a long-term peace deal in the Middle East.
The dollar index rose 0.03% to 100.88, supported by the US Federal Reserve's hawkish stance and uncertainty surrounding the US-Iran diplomatic process, as reported by The Times of India. Market participants noted that a strengthening dollar index is posing a risk to the Indian currency. Dilip Parmer, research analyst at HDFC Securities, said that the rupee has depreciated mainly due to higher dollar demand, with importers, hedgers, and other traders stepping in at those levels. The rupee has remained within a 94.10 per dollar-94.80 per dollar range in recent sessions, with the 94.10 level continuing to provide support despite intermittent dollar sales linked to inflows. Foreign currency non-resident (FCNR) and external commercial borrowing (ECB)-related inflows continued to support the rupee, though demand for dollars from oil marketing companies and foreign portfolio investors limited gains. Brent crude, the global oil benchmark, fell 1.75% to $79.16 per barrel in futures trade, providing some relief to the rupee's decline.
Sashi Dhar, head of treasury at Bank of Baroda, noted that the new FCNR (B) scheme is operational from June 8, with the rupee expected to be in positive territory as dollars flow in. "In addition, the crude oil prices are also coming down, which is positive for India as we are a big importer of oil. We are planning to bring in $3 to $4 billion to the country," Dhar said. Market participants anticipate that the policy measures announced to attract dollar inflows will bring in around $50-80 billion. Parmer added that the short-term outlook for the rupee remains favourable, with either the central bank or hedgers expected to step in through dollar purchases near the 94 level, limiting further appreciation. According to the RBI's monthly bulletin, the central bank net sold $8.944 billion in the spot foreign exchange market in April, following net sales of $9.758 billion in March. Despite Monday's decline, the rupee has appreciated 0.2% against the dollar so far in the current financial year up to June 19, according to RBI data.
The Indian stock market rebounded on Monday, with the Sensex rising 291.17 points to close at 77,094.07 and the Nifty gaining 89.80 points to settle at 24,102.90, as reported by The Times of India. However, foreign institutional investors turned net sellers, offloading equities worth ₹635.91 crore during the session, according to exchange data. On the macroeconomic front, government data showed growth in India's eight core infrastructure sectors slowed to a seven-month low of 0.5% in May, compared with 1.8% in April, due to weaker output from coal, crude oil and refinery products. Despite the rupee's decline, dollar-rupee far forward premiums rose on Monday with the 1-year forward implied yield up 10 bps at 2.95%, reflecting the cost of hedging against rupee depreciation. Market participants also tracked developments in Switzerland, where US-Iran talks concluded with an agreement to begin a 60-day diplomatic process aimed at reaching a permanent settlement to the conflict.
Brent crude, the global oil benchmark, fell 1.75% to $79.16 per barrel in futures trade, providing some relief to the rupee's decline, as reported by NDTV Profit. Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, noted that Brent oil was very near to $79 per barrel as talks between US and Iran were progressing while Iran had closed the Strait of Hormuz. Asian currencies witnessed broad weakness against the US dollar, with Asian currencies declining between 0.3% and 0.7%. The South Korean Won emerged as the worst performer, falling 0.61%, followed by the Malaysian Ringgit, which declined 0.58%. The Philippine Peso lost 0.34%, while the Indonesian Rupiah and Taiwan Dollar slipped 0.21% and 0.16% respectively. The Chinese Renminbi and Japanese Yen remained relatively stable, easing just 0.06% and 0.02% respectively. Among the gainers, the Thai Baht rose 0.05% and the Singapore Dollar added 0.03%.
