The Indian rupee climbed to a two-week high on Monday, supported by aggressive intervention from the Reserve Bank of India (RBI), easing crude oil prices and a sharp unwinding of long dollar positions.
The domestic currency strengthened to 95.7950 against the US dollar, compared with its previous close of 96.5625, extending gains after breaking below the key 96.14–96.16 resistance zone. The move accelerated as traders rushed to unwind bullish dollar bets, triggering a wave of stop-loss selling.
Market participants said the rally was driven by a combination of RBI intervention, declining global crude oil prices and improving technical momentum.
According to traders, the RBI sold dollars in the spot market while simultaneously conducting buy/sell swap operations in the forward market. The intervention pushed down forward premiums, with the one-year implied interest rate falling around 10 basis points to 2.82 per cent.
Estimates suggest the central bank sold between $1.5 billion and $3 billion during Monday’s trading. Bankers also indicated that the RBI was active in both the spot and non-deliverable forward (NDF) markets. Traders said the central bank had adopted a similar strategy on Friday to prevent the rupee from slipping to a record low.
Adding to the rupee’s strength, Brent crude prices fell below $90 per barrel after the United States signalled a pause in military action against Iran to allow more time for diplomatic efforts. Lower oil prices typically support the rupee by reducing India’s import bill and easing demand for dollars from oil importers.
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Investor sentiment also received a boost from the RBI’s recent measures to attract foreign currency inflows. RBI Governor Sanjay Malhotra told The Hindu BusinessLine that the central bank’s dollar mobilisation schemes introduced in June have already attracted nearly $32 billion, strengthening India’s foreign exchange buffers and enhancing the RBI’s ability to counter depreciation pressures.
The combination of central bank support, easing crude prices and stronger foreign currency inflows has significantly improved near-term sentiment for the rupee after weeks of persistent pressure.
