RBI Intervenes as Rupee Rebounds Amid Surging Oil Prices

The Indian rupee recovered from near-record lows on Friday after the Reserve Bank of India (RBI) reportedly intervened in the foreign exchange market to counter pressure from soaring crude oil prices, weak domestic equities and increased demand for the US dollar. According to traders, state-run banks sold dollars on behalf of the RBI shortly before markets opened, helping the rupee strengthen to 96.50 against the US dollar after briefly touching 96.80 in interbank trade. The intervention came as Brent crude crossed the $100-per-barrel mark for the first time in two months amid escalating tensions in West Asia. US President Donald Trump also warned of "major military punishment" against Iran and its Houthi allies, fuelling concerns over global oil supply disruptions. India, which imports nearly 90% of its crude oil requirements, remains highly vulnerable to rising oil prices as they increase inflationary pressures, widen the current account deficit and drive demand for dollars. Market participants said the RBI's intervention on Friday appeared stronger than earlier this week, signalling the central bank's intent to curb excessive volatility in the currency market. However, analysts believe the rupee could remain under pressure if crude prices continue to rise. Foreign exchange experts also noted that increased hedging by importers and corporates, amid expectations of further rupee depreciation, has added to demand for the US dollar. While the RBI maintains that it intervenes only to smooth excessive market volatility, uncertainty over the central bank's tolerance for further weakening of the rupee continues to weigh on market sentiment.

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