What factors are currently pressuring the Indian rupee despite its recent rally?

The Indian rupee is facing pressure from a surge in oil prices—Brent futures rose to $95.50 a barrel amid heightened Middle East tensions—and rising U.S. Treasury yields, which hit their highest levels since late 2023; these forces threaten to blunt the rupee’s recent gains, which have been driven largely by aggressive Reserve Bank of India (RBI) intervention and dollar selling by foreign banks.

How has the RBI supported the rupee recently, and what has strengthened its capacity to intervene?

The RBI has supported the rupee through aggressive market intervention, acting as the 'only meaningful dollar seller' in the market; its intervention capacity has been bolstered by a surge in non-resident Indian (NRI) deposits under the FCNR(B) scheme, which topped $100 billion by the August 31 deadline for banks to raise deposits eligible for concessional swaps with the RBI.

RBI's Bid to Lift Indian Rupee Put to Test by Oil, US Yields

Sep 1, 2026

The Indian rupee faces pressure from surging oil prices and US Treasury yields despite Reserve Bank of India intervention. Brent crude climbed to $95.50 per barrel amid Middle East tensions, challenging the currency's recent rally.

reuters

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