Rupee under pressure as RBI steps into FX market

India’s rupee came under fresh pressure on Monday, weakening as much as 0.2% to 96.4575 per US dollar and moving back toward its record low. The renewed slide highlighted persistent vulnerability in the currency despite earlier policy steps aimed at improving foreign-exchange inflows.

The move in the rupee reflected a combination of global and domestic factors, with traders pointing in particular to the sharp run-up in crude prices and associated concerns over India’s external balances. The session’s price action put the currency within striking distance of the low it touched in late May.

To stem the rupee’s decline, the Reserve Bank of India intervened in both offshore and onshore foreign-exchange markets by selling US dollars, according to traders. The intervention signaled an effort to smooth volatility and prevent a disorderly move as the currency drifted toward previous extremes.

Authorities have also unveiled measures in recent months to attract more foreign currency into the country, including steps to ease investment in domestic bonds and encourage additional dollar deposits from non-resident Indians. These initiatives are intended to bolster foreign-exchange buffers and support the currency over time.

The rupee’s weakness coincided with a sharp rise in global crude benchmarks. Brent crude (UKOIL) breached $90 per barrel on Monday and at times traded around $91.42 during Asian hours, extending a rally that has unfolded over recent weeks.

Higher oil prices are a key concern for India because crude is a major component of the country’s import bill. The latest jump in prices raised worries about a larger outflow of foreign currency, reinforcing downward pressure on the rupee and complicating efforts to stabilize the exchange rate.

India’s bond market also reacted to the shifting macro backdrop. Benchmark 10‑year government bond yields climbed about 4 basis points to roughly 6.82%, reflecting both the move in global oil and renewed focus on inflation and fiscal dynamics.

Despite these pressures, foreign investors have been active buyers of Indian debt in recent weeks. Since June 1, overseas investors have purchased nearly $4.3 billion of bonds under the Fully Accessible Route, which allows unrestricted foreign participation in specified government securities.

Recent bond inflows suggest continued international interest in India’s local-currency assets, even as short-term currency moves remain influenced by commodity prices and global risk sentiment. The combination of policy support and sustained demand for bonds has so far not been enough to prevent renewed rupee weakness.

Market participants are focused on how the balance between rising oil prices, foreign inflows and central bank intervention will evolve. The rupee’s trajectory will likely hinge on the persistence of elevated crude prices and the scale of any further operations in the foreign-exchange market.