Indian Rupee Hits 8-week High

The Indian Rupee touched 94.83 against the USD, the highest since July 2026. Over the past 4 weeks, US Dollar Indian Rupee lost 0.51%, and in the last 12 months, it increased 7.78%.

The Indian rupee rose to around 94.9 per dollar, rebounding sharply to an eight-week high, as persistent Reserve Bank of India intervention and favourable near-term momentum outweighed pressure from elevated US Treasury yields and higher oil prices. The rupee was also supported by flow-related dollar selling, while India’s GDP expanded 7.8% year-on-year in the June quarter of 2026, exceeding market expectations. However, gains could be limited as importers are expected to increase hedging at current levels, while the RBI’s FX forward book reached a record $137 billion in July. Meanwhile, the 10-year US Treasury yield climbed to 4.778%, its highest since January 2025, while Brent crude rose to around $91.14 a barrel as renewed US-Iran tensions heightened inflation concerns. Traders also assessed India’s fiscal position as the fiscal deficit narrowed to INR 4.6 trillion in April-July from INR 4.7 trillion a year earlier, reaching 26.8% of the full-year target versus 29.9% previously.

The Indian rupee weakened to around 95.2 per dollar, after trading largely flat in the previous week, as renewed expectations of a Federal Reserve rate hike strengthened the dollar and pushed US Treasury yields higher. Markets raised the probability of a September rate increase to nearly 60% following hawkish remarks from Fed Chair Kevin Warsh, increasing pressure on the rupee. Higher crude prices also weighed on sentiment, with Brent approaching $90 a barrel amid renewed tensions around the Strait of Hormuz. However, persistent foreign-currency inflows and RBI intervention are expected to limit the currency's downside, with the 95.70-95.80 zone seen as a well-defended level. India's forex reserves reached a record $729.33 billion in the week to August 21, rising for an eighth straight week as RBI measures attracted nearly $73 billion in inflows, including about $65 billion from non-resident Indian deposits.