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Informist, Wednesday, Sept. 2, 2026

 

By Pratiksha

 

NEW DELHI – The rupee is likely to remain broadly stable against the dollar this month despite expectations of a strengthening dollar and uncertainty related to the war in West Asia, thanks to the Reserve Bank of India's active intervention, market participants said. The Indian currency is likely to settle at 95.00 a dollar by the end of this month, broadly steady from 95.16 per dollar at the end of August, according to the median of estimates from 11 banks, corporates and brokerages polled by Informist. None of the respondents expect the Indian unit to fall below the key 96.00 per dollar mark by the end of the month. 

 

The rupee appreciated 0.2% against the dollar last month, primarily because of the central bank's active intervention across the spot and offshore non-deliverable forwards market following strong inflows into its concessional swap window for foreign currency non-resident (banks) deposits, dealers said.

 

While the central bank pushed the deadline for mobilising deposits under the swap facility for FCNR(B) deposits ahead by a month to Aug. 31, the scheme attracted robust inflows. As per latest data, between Jun. 8 and Aug. 21, the policy measures announced by the RBI attracted inflows worth over $72.85 billion. Nearly 90% of these inflows came from FCNR(B) deposits at $65.40 billion. 

 

Most market participants expect the total funds mobilised through the FCNR(B) deposits scheme to have surged to around $85 billion-$100 billion by the Aug. 31 deadline. "We expect inflows of around $20-25 billion from August 22 to 31 under the RBI's swap scheme. The liquidity impact will however be lower (~$15 billion) given RBI's continued FX intervention to support the rupee," Kotak Mahindra Bank said in a note.

 

The inflows being parked with the RBI lead to an increase in foreign currency reserves with the central bank, which act as borrowed ammunition to deter speculative moves against the rupee and can be used to prevent the currency's depreciation. Thus, market participants expect the apex bank to continue actively intervening through dollar sales as has been the case last month, if the Indian unit comes under sharp pressure.

 

"The closure of the FCNR(B) window means that one important source of fresh foreign-currency mobilisation is no longer available. However, it does not materially reduce the RBI's ability to manage rupee volatility," said Amit Pabari, managing director at CR Forex. India's foreign exchange reserves were at a record high of $729.33 billion as of Aug. 21.

 

Anindya Banerjee, head of research - commodity and currency, Kotak Securities, said that the jump in foreign exchange reserves has a significant impact on market positioning. "A jump of this size in the central bank's wherewithal fundamentally changes the risk-reward for anyone running a short rupee position," he added. "It keeps the speculative element at bay, particularly in the offshore NDF market and to a degree onshore as well, because the market now knows the RBI can absorb sustained pressure without a visible reserve drawdown."

 

BUGBEARS LINGER

With over six months into the war in West Asia, international crude oil prices continue to pose downward pressure on the Indian unit. Market participants said that renewed conflict in the West Asia has dimmed any prospects for the reopening of the Strait of Hormuz. US President Donald Trump threatened further strike against Iran on Monday after the first exchange of direct attacks in a month. 

 

"We expect gradual rupee depreciation, primarily driven by FII (foreign institutional investor) outflows, crude oil prices and the US dollar trend," said Jateen Trivedi, VP research analyst - commodity and currency, LKP Securities. Last month, Brent crude futures rose almost 3%. 

 

Market participants expect the rupee to continue being sensitive to the movement in crude oil prices. So far in 2026, the Indian unit has fallen almost 5.7% against the dollar. If crude oil prices sustainably rise above $95 per barrel, a level hit early Wednesday, most dealers expect the rupee to fall below 96 a dollar. 

 

The Indian currency is likely to settle at 95.63 a dollar by December-end, according to the median of estimates from eight banks, corporates and brokerages polled by Informist.

 

Apart from crude oil, US dollar is likey to be another source of pain for the Indian currency, market participants said. US Federal Reserve Chairman Kevin Warsh's comments last week have increased odds of a rate hike by the US central bank this month, leading to expectations of a strengthening dollar. Warsh hinted that interest rate hikes may be needed should policymakers doubt that inflation is headed back toward the central bank's ‌2% target.

 

The Fed next meets on Sept. 15-16, with fed funds futures traders currently pricing in 66% odds of a rate hike, according to CME FedWatch Tool. 

 

POLL DETAILS

 

Participant	Sept-end	Dec-end
CR Forex	95.80-96.00	96.80-97.20
CSB Bank	95.00	94.40-95.50
Finrex Treasury Advisors LLP	94.50	93.50
Globe Capital Market	94.00-95.90	-
HDFC Securities	94.10-95.70	-
IDFC FIRST Bank	95.50	96.00
Kotak Mahindra Bank	94.50-95.00	95.50-96.00
Kotak Securities	94.50	92.00
Large state-owned oil company	94.50-95.50	-
LKP Securities	96.00	97.50
Mecklai Financial Services	95.25	95.50
Median	95.00	95.63

 

End

 

US$1 = INR 94.95

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

 

Edited by Akul Nishant Akhoury

 

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