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Informist, Thursday, Sept. 24, 2026

By Divya Moolayattil

MUMBAI – The rupee is expected to fall sharply Thursday as crude oil prices rose above $102 a barrel and the 10-year US Treasury yield climbed to its highest level in 19 years, dealers said. However, they expect the Reserve Bank of India to continue supporting the rupee to ensure an orderly movement. A firm dollar index is also likely to weigh on the local unit.

The rupee is likely to open around 95.86 a dollar Thursday after erasing most of its gains earlier in the week and closing at 95.7400 Wednesday. The Indian unit is expected to move in a range of 95.65-96.00 against the dollar during the day, dealers said. Most dealers expect the Reserve Bank of India to intervene around 95.95, slowing the rupee's depreciation. The central bank has been continuously defending the local unit through dollar sales via public-sector banks, although intervention has been mild, dealers said.

Brent crude oil prices surged over 4% overnight Wednesday, snapping five consecutive sessions of losses, amid heightened uncertainty surrounding US-Iran negotiations. Iranian President Masoud Pezeshkian told the UN General Assembly that Tehran would not bow to US threats, adding that the Islamic Republic would not give up its right to develop nuclear technology for economic development. He also said Iran would not allow freedom of navigation through the Strait of Hormuz as long as sanctions and a US blockade remain in effect.

At 0750 IST, Brent crude for November delivery was at $102.66 a barrel, up from a low of $97.10 seen Wednesday. Prices had traded around $98 a barrel for most of Wednesday before rising after Pezeshkian's statement.

The Indian unit is also expected to be weighed down as US Treasury yields rose sharply Wednesday, fuelled by stronger-than-expected manufacturing data, raising expectations that the US Federal Reserve could hike interest rates again. The 10-year US Treasury yield climbed to 5.06% Wednesday, surpassing its earlier September peak of 5.03% and reaching its highest level since July 2007.

Amid rising global uncertainty, dealers expect importers to continue buying dollars actively, fearing a further fall in the Indian unit, dealers said. Continued foreign portfolio outflows from Indian markets may also exert pressure on the rupee, they said. So far in September, FPIs have pulled out $2.86 billion from the domestic market on a net basis, compared with net inflows of $1.87 billion in August.

The dollar index neared a two-month high as bets of an interest rate hike in October increased, which may weigh on the rupee, dealers said. Traders see around a 70% probability of a rate hike at the October meeting, compared with around 49% a week ago. At 0750 IST, the dollar index was at 101.16, compared with 101.12 Wednesday.

FORWARDS

The one-year dollar-rupee forward premium is expected to rise slightly for the second consecutive day as dealers expect the RBI to conduct dollar-rupee sell-buy swaps, in lower volumes, to drain surplus rupee liquidity from the banking system. Banks may also buy forward dollars for importers, which may support the forward premiums. 

However, elevated US Treasury yields may put downward pressure, limiting the rise of the forward premiums, they said. On an annualised basis, the premium on the one-year exact-period dollar-rupee forward contract is seen at 3.15-3.25% Thursday. Wednesday, it settled at 3.22%. On an absolute basis, the premium ended at 309.67 paise. 

End

US$1 = INR 95.7400

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

Edited by Shubhayan Bhattacharya

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