Rupee Retreats on Oil, Importer Demand

2026-09-08 03:54 By Mariene Camarillo 1 min. read

The Indian rupee fell to around 94.61 per dollar, retreating from more than two-month highs as rising oil prices and increased importer hedging demand pressured the currency.

The rupee’s recovery has lost momentum as companies lock in dollar requirements amid concerns over costlier crude.

Brent crude neared $97 a barrel as escalating US-Iran tensions and threats to Gulf energy infrastructure raised supply disruption risks.

Meanwhile, the RBI remained active after selling at least $8 billion last week, with estimates as high as $15 billion.

Its role has shifted toward cushioning pressure from higher oil prices and US Treasury yields rather than driving further appreciation.

Persistent depreciation concerns have kept hedging flows tilted toward dollars, with importers increasing forward purchases and exporters holding back dollar sales.

Policy-driven dollar inflows have given the RBI greater room to intervene, while foreign exchange reserves recently hit a record $740.8 billion.



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Rupee Retreats on Oil, Importer Demand
The Indian rupee fell to around 94.61 per dollar, retreating from more than two-month highs as rising oil prices and increased importer hedging demand pressured the currency. The rupee’s recovery has lost momentum as companies lock in dollar requirements amid concerns over costlier crude. Brent crude neared $97 a barrel as escalating US-Iran tensions and threats to Gulf energy infrastructure raised supply disruption risks. Meanwhile, the RBI remained active after selling at least $8 billion last week, with estimates as high as $15 billion. Its role has shifted toward cushioning pressure from higher oil prices and US Treasury yields rather than driving further appreciation. Persistent depreciation concerns have kept hedging flows tilted toward dollars, with importers increasing forward purchases and exporters holding back dollar sales. Policy-driven dollar inflows have given the RBI greater room to intervene, while foreign exchange reserves recently hit a record $740.8 billion.
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Rupee Hits Two-Month High
The Indian rupee rose to around 94.4 per dollar, reaching more than two-month highs as persistent Reserve Bank of India intervention and expectations of continued dollar selling supported the currency. The rupee gained 0.9% last week, with the RBI's sustained presence helping insulate it from negative global cues. Traders stated that the central bank's ability to draw on its larger foreign exchange reserves following a surge in foreign-currency inflows has strengthened its capacity to support the currency and contain volatility. Meanwhile, Brent crude surged 7.8% last week to a six-week high of around $97 a barrel after escalating US-Iran tensions raised concerns over prolonged supply disruptions, while stronger-than-expected US jobs data increased the likelihood of a Fed rate hike at its Sept. 15-16 meeting. Attention now turns to US August inflation data due Friday, which could influence expectations for the Fed's policy decision.
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