The Indian rupee ended marginally stronger at ₹96.2925 per dollar, supported by lower Brent crude prices and improved sentiment, as per The Economic Times. The currency opened 10 paise up at ₹96.2150 per dollar and traded in a narrow 10 paise range throughout the day as investors awaited fresh direction from the Reserve Bank of India. The currency had depreciated half a percent last week, but recent developments provided some relief. The dollar started the week on firm footing, hovering near a 17-month high on Monday, boosted by weakness in the euro amid worries over France's fiscal situation, and knocked Asian currencies 0.1 per cent to 0.5 per cent lower. Improving risk-on sentiment provided additional support for the local currency, though traders are now focusing on the Reserve Bank of India's upcoming monetary policy decision and foreign capital flows for further direction.
The Reserve Bank of India's Monetary Policy Committee is expected to announce its decision on Wednesday, October 7, 2026, with market participants widely expecting a 25 basis point increase in benchmark rates, as per The Economic Times. The RBI's rate-setting committee is widely expected to tighten the policy rate by 25 basis points to 5.5% from 5.25%, marking the first rate hike since February 2023 when the RBI raised the rate by 0.25% to 6.50%. Currently, the RBI's policy repo rate stands at 5.25%, with markets widely expecting the 25 basis point increase. "While the inflation shock is largely supply-driven, we expect the RBI to raise rates to prevent inflation expectations from de-anchoring," Deepali Bhargava, Regional Head of Research for Asia-Pacific at ING, said in a note. Markets will be focused on the RBI's guidance on the extent and duration of the tightening cycle, as noted by Bhargava.
Brent crude prices dropped overnight, providing relief to the rupee and lifting investor sentiment, as per The Economic Times. Crude oil prices had previously nudged up to nearly $103 per barrel, posing significant risks to India's economy due to the country's energy import-dependent nature. Though West Asian exports have increased, concerns about ongoing war-related disruption are keeping prices elevated, creating an ever-present threat to India's energy import-dependent economy. The lingering pressures have left the rupee reliant on central bank interventions to avert testing record low levels hit in May. The rupee's modest recovery is likely more a reflection of expectations that the Reserve Bank of India will step in, according to a currency trader at a private sector bank cited by CNBC TV18.
Foreign Institutional Investors (FIIs) offloaded equities worth ₹9,484.22 crore on a net basis on Thursday, according to exchange data, as per CNBC TV18. India's forex reserves dropped $18.343 billion to $747.557 billion during the week ended September 25, the Reserve Bank said on Friday, compared to a decline of $14.881 billion to $765.901 billion in the previous reporting week. Between January and September, importers booked $576.6 billion in forward hedges, far exceeding $305.6 billion by exporters, per clearing house data. Persistently high levels of hedging by importers, combined with reticence from exporters to enter the market, have also pressured the South Asian currency, according to The Hindu BusinessLine. On the domestic equity market front, Sensex jumped 472.77 points to settle at 72,382.47, while the Nifty climbed 133.80 points to 22,555.75 in Monday's trading session.
India's Finance Minister Nirmala Sitharaman said on Monday that talks between India and the United States have reached a plateau and further concessions might be difficult, as reported by The Hindu BusinessLine. Forex and equity markets were closed on Friday, October 2, 2026, on account of Mahatma Gandhi Jayanti, as reported by CNBC TV18. The rupee had slumped below the psychologically important 96 per dollar mark to close at 96.25 against the U.S. dollar on Thursday, October 1, 2026. Forex traders noted that periodic dollar interventions by the Reserve Bank of India helped smooth excessive intraday volatility and capped sharper losses for the rupee. The overall macro environment of elevated import bills and persistent greenback strength weighed on investor sentiment.
