Indian Rupee Rebounds on US Tariff Slash

The Indian rupee hovered around 95.67 per dollar, extending gains for a third consecutive session as softer crude oil prices and lower long-dated US Treasury yields improved risk sentiment, while continued RBI intervention and large foreign currency inflows helped limit depreciation risks. India’s measures to strengthen its balance of payments have raised $143.6 billion, bolstering external liquidity and allowing the central bank to maintain a firm grip on rupee weakness. Brent crude was around $100 a barrel ahead of potential US-Iran talks at the UN General Assembly, keeping oil prices a key focus given their impact on India’s import bill and expectations for RBI rate hikes. Meanwhile, traders have raised bets on monetary tightening after the Fed and Bank of Japan raised rates last week, with markets pricing a 56% chance of a US hike in October. Importer hedging demand capped gains, with the rupee expected to stay within 95–96 ahead of the RBI decision.

The Indian rupee strengthened to around 95.86 per dollar, rebounding from seven-week lows as easing crude oil prices, expectations of foreign portfolio inflows linked to the National Stock Exchange’s $2.3 billion IPO and likely RBI intervention supported the currency. Brent crude fell for a third straight session to around $104.1 a barrel as hopes of alternative routes for Middle Eastern oil to reach markets outweighed supply concerns, while a modest retreat in US bond yields also provided relief. Traders expect sizeable foreign institutional investor demand for the NSE IPO, which closes for subscription on Monday. The rupee held near 96 per dollar on Thursday despite the Federal Reserve’s rate hike, recovering after likely RBI intervention and portfolio inflows linked to global equity index rebalancing. However, strong importer dollar demand and elevated oil prices remain headwinds, while the dollar stays above 100 following the Fed’s hawkish stance.

The Indian rupee fell to around 95.9 per dollar, extending losses to multi-week lows as elevated crude oil prices, a stronger dollar and expectations of further US monetary tightening weighed on the currency. Brent crude hovered near $108 a barrel, keeping demand for dollars from oil importers elevated, while the US 10-year Treasury yield approached 5%. The pressure intensified after the Federal Reserve raised interest rates by 25 basis points on Wednesday, its first hike since 2023, and signalled another increase could follow this year. The move pushed the Dollar Index above 100 to its highest level in more than a month, while futures indicated roughly a 50% chance of another Fed hike next month. Foreign portfolio outflows from Indian stocks and bonds added to the pressure, although a $703 million allocation of NSE shares to anchor investors and continued RBI dollar sales could provide some support.