Rupee Pauses Decline After RBI FX Intervention

The Indian rupee hovered around 95.5 per dollar, pausing losses as traders pointed to likely intervention by the Reserve Bank of India through dollar sales to temper volatility. The currency remained under pressure, however, amid renewed geopolitical tensions after fresh US military strikes on Iran and retaliatory attacks on Kuwait and Bahrain fueled concerns over oil supplies. Brent crude remained on the rise, gaining more than 8% over the previous two sessions. Broader market caution also weighed on domestic assets, sending the benchmark 10-year government bond yield up 7 basis points on Wednesday, its biggest one-day rise in over three months, while Indian equities fell 2%, their steepest drop over the same period. Meanwhile, Fed meeting minutes reinforced expectations of tighter US monetary policy, with futures implying a one-in-three chance of a rate hike this month and a two-in-three probability by September.

The Indian rupee weakened to around 95.1 per dollar, retreating after a brief stabilization as renewed Middle East tensions lifted global oil prices and strengthened the US dollar. Brent crude climbed above $76 per barrel after rising 2.6%, extending the previous session's 3% surge, raising concerns over India's import bill and inflation outlook. Market sentiment deteriorated after the US launched fresh strikes on Iran and revoked a license permitting Iranian oil sales following attacks on three tankers in the Strait of Hormuz. Meanwhile, the yield on the 10-year US Treasury note rose to 4.565%, the highest in nearly a month, as higher energy prices fueled inflation concerns, while the US Dollar Index edged above 101, adding pressure on emerging-market currencies. Earlier, the currency had posted its strongest daily gain in over three weeks after dollar sales in the non-deliverable forwards market, though it had still fallen about 1% over the previous week.

The Indian rupee hovered around 95.2 per dollar, pausing recent losses after sliding to a one-month low near 95.50 as a softer US dollar and gains across most Asian currencies offered some relief. The dollar index eased to just below 101 after weaker-than-expected US June jobs data tempered expectations for additional Federal Reserve tightening. However, the rupee remained under pressure after shedding more than 1% over the past six sessions and slipping to a one-month low near 95.50 in the previous session, weighed by steady importer demand for dollars, arbitrage-related outflows, and lingering expectations that the Fed could still raise interest rates later this year. Investors also awaited the release of the Fed's June 16–17 meeting minutes for further policy guidance, while markets remained alert for potential intervention by the Reserve Bank of India, which was reported to have sold dollars through state-run banks near the 95.50 level to help curb further depreciation.