The Reserve Bank of India (RBI) likely intervened on Friday to prevent the rupee from falling to a record low of 96.96 against the U.S. dollar, especially given renewed corporate hedging against potential rupee weakness. Traders reported that state-run banks were seen selling dollars, likely on behalf of the RBI, both before the market opened and throughout the session. This intervention succeeded in pulling the rupee higher, allowing it to close at $96.5625 per U.S. dollar, largely unchanged for the day.
This intervention came as Brent crude prices topped $100 a barrel for the first time in two months, before retreating about 4%. The rise in oil prices, along with weak domestic equities and escalating geopolitical tensions in the Middle East, created pressure on the rupee. Analysts at J.P. Morgan suggested that the rupee's recent fall and the increase in oil prices likely surprised markets, leading to a new wave of hedging.
Separately, the RBI reportedly sold at least $5 billion worth of U.S. dollars in the past month to bolster the rupee. This could make it the RBI's largest month of net dollar sales since January if the trend continues. In recent years, the central bank has built up a significant short dollar forward position, which had reached a record $106.7 billion in May, to support the rupee.
The rupee had recovered 18 paise to close at $96.55 against the U.S. dollar on Friday, July 24, 2026, amid the likely RBI intervention. Forecasts from analysts suggested the USD-INR spot price would trade within a range of $96.30-$96.85, with potential for further pressure from escalating U.S.-Iran tensions and elevated crude oil prices. However, diplomatic talks between these nations could prevent a sharp fall in the rupee.
