08.09.202603:54:34UTC+00Rupee Retreats on Oil, Importer Demand

The Indian rupee weakened to about 94.61 per dollar, pulling back from its highest levels in over two months as rising oil prices and increased hedging demand from importers weighed on the currency. The rupee’s earlier rebound has lost steam, with companies rushing to secure their dollar needs amid worries over more expensive crude. Brent crude approached $97 a barrel as escalating US–Iran tensions and threats to Gulf energy infrastructure heightened fears of supply disruptions.

At the same time, the RBI remained active in the foreign exchange market after selling at least $8 billion last week, with some estimates placing interventions as high as $15 billion. Its focus has increasingly shifted from supporting rupee appreciation to cushioning the impact of higher oil prices and elevated US Treasury yields. Ongoing depreciation concerns have kept hedging flows skewed toward the dollar, with importers stepping up forward purchases while exporters delay converting their dollar earnings. Policy-driven dollar inflows have, however, given the RBI more room to intervene, and India’s foreign exchange reserves have recently climbed to a record $740.8 billion.