Indian Rupee Holds Near Lifetime Low

The Indian rupee strengthened to around 92.7 per dollar, extending gains from the previous session, supported by measures from the Reserve Bank of India to curb oil-related dollar demand. The central bank reportedly directed state-run oil importers to route their foreign exchange needs through a special credit facility via State Bank of India instead of the open market, reducing immediate USD demand and easing pressure on the rupee, given India’s reliance on crude oil imports. Broader measures, including tighter FX position limits for banks and restrictions on offshore-linked hedging activity, also helped curb speculative pressure and support the currency. Additionally, foreign investors turned net buyers in Indian equities, with inflows of around INR 3.8 billion helping underpin sentiment. Meanwhile, broader sentiment remained uneven, with elevated crude prices and ongoing geopolitical uncertainty in the Middle East continuing to weigh on risk appetite.

The Indian rupee hovered near 93.2 per dollar, pausing losses as easing geopolitical concerns provided support to the currency. Expectations that the US and Iran may extend their ceasefire by two weeks have reduced fears of further escalation, helping stabilize global financial markets. Even so, gains remained limited as sustained dollar demand from importers, particularly oil marketing companies, continued to cap appreciation. While softer crude prices provided some relief by easing concerns over India’s import bill, that effect was largely offset by hedging activity and steady demand for the greenback, keeping the currency confined to a narrow range. On the domestic front, investors weighed mixed macroeconomic signals, with India’s unemployment rate edging up to 5.1% in March from 4.9% in February, indicating a slight softening in labor market conditions. This was partly offset by a positive surprise in external trade, as the goods trade deficit narrowed sharply to $20.67 billion.

The Indian rupee hovered near 93.1 per dollar, pausing losses after slipping to a three-week low as intervention and tighter oversight by the RBI helped calm volatility. The central bank has pushed lenders to unwind large arbitrage positions across onshore and offshore markets, reducing dollar demand and aiding the currency’s rebound. Regulators are also reviewing whether banks fully closed these trades or shifted exposures to corporate or related entities. While these steps offered short-term relief, side effects are emerging. Market liquidity has thinned, and hedging costs have climbed, making it pricier for investors to operate. Meanwhile, external pressures, including higher energy prices and geopolitical risks, continue to weigh on the rupee. More broadly, the currency remains fragile due to persistent capital outflows, a rising import bill, and weak foreign investment.