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Informist, Tuesday, Aug. 18, 2026

By Divya Moolayattil

MUMBAI – The rupee is expected to fall against the dollar as crude oil prices crossed $91 per barrel, after hovering around $90 per barrel for more than two weeks. Crude oil prices jumped after US President Donald Trump cast doubt on a deal with Iran to extend the ceasefire that expired Monday. Iran also has ruled out talks to extend the memorandum of understanding, Iranian media reported.

The rupee is expected to open around 95.65-95.68 per dollar. The Indian unit may move in a range of 95.40-95.80 against the dollar Tuesday after settling at 95.6025 Monday, dealers said.

Dealers said the rupee is likely to test 95.80 per dollar Tuesday on higher crude oil and US Treasury yields. The 10-year US Treasury yields rose to a more-than-two-week high, while the 30-year US government bond yield rose above 5.3%, its highest level since June 2007, as investors assessed mounting inflation and fiscal risks.

However, dealers said the Reserve Bank of India will support the rupee and intervene if it approaches 95.80 per dollar. "RBI will definitely intervene. However, there is a decent possibility of the rupee testing 95.80 today," a dealer at a brokerage firm said. Dealers said the central bank will try to keep the rupee around 95.70 during the day. 

Dealers expect a gradual depreciation toward 96.00 per dollar rather than a sharp fall, supported by the Reserve Bank of India's ongoing dollar sales. "Crude is higher, exporters are muted. The RBI should allow depreciation very gradually. He would supply dollars gradually. Daily demand of USD is $1.5 billion," a dealer at a private sector bank said. 

Dealers said the RBI has been using the dollar inflows received through the foreign currency non-resident (bank) swap window. India's foreign-exchange reserves have surged by over $36 billion from the week ended Jun. 12, reaching $707 billion by Aug. 7. The RBI's measures to boost foreign capital inflows attracted a total of $56.85 billion between Jun. 8 and Thursday. Of this, inflows through FCNR(B) deposits amounted to $52.30 billion.

Brent crude oil prices are almost 50% higher than they were at the start of the year and more than 25% higher since Feb. 28, when the war in West Asia began, as traffic through the Strait of Hormuz has plummeted. Only three ships passed through the key waterway Monday compared with an average of about 130 ships before the war.

Dealers said banks are likely to buy dollars actively on behalf of importers, which may put further pressure on the Indian unit. However, amid negative geopolitical sentiment, a weaker dollar index is likely to give the rupee some respite. The dollar index remained below 99.60 on Tuesday, as investors scaled back expectations of the US Fed hiking interest rates in September after weaker-than-expected economic data. 

FORWARDS

The one-year dollar-rupee forward premium is expected to rise as banks may buy dollars for forward delivery on behalf of importers, dealers said.

On an annualised basis, the premium on the one-year exact-period dollar-rupee forward contract is seen at 2.80-2.90% Tuesday. On Monday, it settled at 2.79%. On an absolute basis, the premium ended at 266.33 paise.

End

US$1 = INR 95.6025

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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