Emerging market currencies experienced a mixed day on July 28, 2026. While some, such as the South Korean Won, faced pressure from a significant decline in technology stocks, others like the Indian Rupee demonstrated resilience. The Rupee, in particular, opened 15 paise stronger at 95.76 against the dollar, following its best daily performance in six weeks with a 70 paise gain. This strengthening was attributed to a combination of factors: likely dollar selling by the Reserve Bank of India (RBI) in the spot market, a sharp drop in crude oil prices, and the prospect of nearly $32 billion in foreign currency non-resident bank (FCNR-B) deposit inflows.
Global oil prices played a significant role in currency movements. Brent crude futures were trading about 1% lower at nearly $87 a barrel, with some reports indicating prices falling as low as $82.24 per barrel for October delivery. This decline was largely due to a pause in hostilities between the United States and Iran, hinting at a diplomatic solution. Analysts at Finrex Treasury Advisors highlighted that the fall in crude oil prices, coupled with RBI support and robust foreign currency inflows, were key drivers behind the Rupee's rally. The RBI's persistent intervention has also kept speculators at bay.
Meanwhile, market participants were closely watching the Federal Reserve's policy decision meeting on July 29. While many expected the rates to remain unchanged, approximately one-third of traders were still pricing in a rate hike, with the CME FedWatch Tool indicating roughly a 31.5% chance. The dollar, however, moved lower against its main rivals ahead of this decision. The overall sentiment in emerging markets was also influenced by a rout in tech stocks, particularly in Asia, with South Korea's Kospi index plunging nearly 11% due to concerns over the AI boom and competition in the chip industry.
