The rupee ended the session at 95 per dollar, up 0.7% from the previous session, its best day since April 2. It gained by a similar amount week-on-week, but was flat for the month.
While the rupee appeared set to endure a weaker day, likely dollar selling intervention reversed the trajectory, with a drop in crude prices adding to the upward momentum.
Oil prices dropped after a plan for extending the truce between the U.S. and Iran awaited approval from U.S. President Donald Trump. Brent futures were last hovering around $91 per barrel, on track for their steepest weekly decline since early April.
According to four sources familiar with the matter, the agreement would extend the truce for another 60 days and allow traffic to flow through the Strait of Hormuz, a key artery for global energy supplies.
Worries over the economic hit to India – the world’s third-largest oil importer – have spurred steep capital outflows, with overseas investors pulling over $24 billion from Indian debt and equities on a net basis between March and May.
Investors’ focus is now on the Reserve Bank of India’s monetary policy decision on June 5. Most economists polled by Reuters expect the RBI to keep its key interest rate unchanged at 5.25%. A minority are anticipating a rate increase to counter inflationary risks and steady the currency, which is down more than 5% so far in 2026.
“Our base case is that the RBI lifts the repo rate to 6.00% before the end of the year, but that is contingent on the crisis coming to an end soon and energy prices dropping back,” Shilan Shah, deputy chief EM markets economist at Capital Economics, said in a note.
