The Indian rupee staged a significant recovery, gaining 50 paise against the US dollar from its all-time low, as global crude oil prices retreated and geopolitical tensions showed signs of easing, coupled with anticipated central bank intervention.
Photograph: Priyanshu Singh/Reuters
Key Points
- The rupee recovered 50 paise to settle at 96.36 against the US dollar, rebounding from its all-time closing low.
- The recovery was attributed to a retreat in crude oil prices and tentative signs of easing geopolitical friction.
- Likely intervention by the Reserve Bank of India (RBI) also supported the domestic currency’s rebound.
- The one-year forward market rate for the rupee touched 100/USD, indicating market expectations of further weakening over the next 12 months.
- Analysts forecast the USD/INR pair to trade in a 95-100 range for the rest of 2026, with investor focus remaining on geopolitical developments and the upcoming RBI monetary policy review.
The rupee rebounded 50 paise from its all-time closing low to settle at 96.36 against the US dollar on Thursday after crude oil prices retreated from elevated levels amid signs of easing geopolitical friction, alongside likely central bank intervention.
Forex traders said the rupee had gained after the recent geopolitical developments, but investors are still gauging the geopolitical risk and oil price sensitivity in the background.
Market Dynamics and Future Outlook
The one-year forward market rate for the rupee touched the crucial 100/USD mark on Wednesday, indicating that currency markets are pricing in a weakening bias for the USD/INR pair over the next 12 months, forex traders said.
At the interbank foreign exchange market, the rupee opened at 96.25 against the dollar, then touched an early high of 96.05 and a low of 96.60 in intra-day trade.
At the end of Thursday’s trading session, the rupee was quoted at 96.36, up 50 paise from its previous closing.
On Wednesday, the rupee hit a record low of 96.95 and later closed at 96.86, which was also a new closing low.
“This recovery follows a retracement in crude oil prices amid tentative signs of easing geopolitical friction, alongside active central bank intervention.
“Moving forward, investor focus will remain anchored on geopolitical developments and the upcoming RBI monetary policy review,” said Dilip Parmar, Research Analyst, HDFC Securities.
Parmar further added that from a technical standpoint, spot USD-INR is finding firm support at 95.74, while immediate resistance remains capped at 96.50.
RBI Intervention and Global Factors
“The rupee rose from all-time lows on intervention by the RBI and an overnight decline in crude oil prices.
“Media reports that the RBI may consider hiking rates to defend the rupee also supported the domestic currency,” Anuj Choudhary, Research Analyst, Commodities Research, Mirae Asset Sharekhan, said.
“We expect the rupee to trade with a negative bias due to geopolitical uncertainty between the US and Iran.
“However, Donald Trump said the peace deal is in its final stages, which improved global risk sentiments,” he added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.30, up 0.22 per cent.
Brent crude, the global oil benchmark, was trading down 0.75 per cent at $104.23 per barrel in futures trade.
Expert Forecasts and Market Impact
“Rupee has been in the midst of a rapid and dramatic depreciation streak, falling by over 6 per cent in CY26 against the dollar and touching successive record lows,” a report authored by Radhika Rao, Senior Economist and Philip Wee, Senior FX Strategist at DBS Bank, said.
“We have lifted our USD/INR forecasts into a 95-100 range for the rest of 2026,” It added.
On the domestic equity market front, Sensex declined 135.03 points to settle at 75,183.36, while the Nifty settled on a flat note at 23,654.70.
Foreign Institutional Investors offloaded equities worth Rs 1,891.21 crore on a net basis on Thursday, according to exchange data.
Background
On Wednesday, the rupee hit a record low of 96.95 and later closed at 96.86, which was also a new closing low.
