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Informist, Tuesday, May 12, 2026

By Pratiksha

NEW DELHI – The rupee fell sharply and ended at a record closing low against the dollar for the second day in a row as crude oil prices rose amid diminishing optimism over a peace deal between the US and Iran, dealers said. Active dollar purchases by importers and foreign portfolio investors also weighed on the Indian unit, they said.  

The Reserve Bank of India stepped in through dollar sales to support the Indian unit, albeit not aggressively, which limit losses for the Indian unit, according to dealers. "It was the same old market, today tracking crude movement," a dealer at a state-owned bank said. "RBI did show some support at certain levels, but broadly, they are also letting it (rupee) go little bit every day."

After hitting a record low of 95.7400 a dollar, the Indian unit settled at 95.6275 Tuesday, 0.3% lower than its previous close. Other Asian currencies declined 0.3-1.2% against the dollar, with the South Korean won being the worst hit. 

US President Donald Trump Monday said the month-old ceasefire with Iran was "on life support" after he rejected Tehran's response to a US plan to end the war, making it clear that the sides were miles apart on resolving the conflict. Brent crude oil prices rose for the third consecutive session Tuesday. Brent crude oil futures for July delivery were at $107.14 a barrel at 1530 IST, up from $104.21 a barrel Monday and $101.29 a barrel Friday.  

Amidst the ongoing energy crises stemming from the war in West Asia, Prime Minister Narendra Modi Sunday urged people to cut down on the use of petrol and diesel to conserve India's foreign exchange reserves. His comments have spooked currency traders as concerns about the adequacy of India's foreign exchange reserves have heightened.

"Rupee was starting to settle and some selling (of dollars) had also started to come in, but after Modi's comments we are seeing more panic buying," a dealer at another state-owned bank said. Following Modi's comments, the Indian currency logged its worst single day fall against the dollar in over six weeks Monday. 

Nomura said in a report that Modi's comments signal that the pressure on government fiscal finances is reaching a tipping point, there is less appetite for further rupee depreciation and the burden of adjustment may be incrementally shared with consumers.

Following PM Modi's comments, expectations of measures by the government and the RBI to shore up foreign inflows into India and support the rupee have increased. Market participants expect uncoventional measures such as a foreign currency non-resident deposit window by the central bank to garner inflows. Bloomberg last week reported that the RBI was considering a plan for state-owned lenders to issue foreign-currency bonds to attract capital inflows and support the rupee.

Banks persistently bought dollars on behalf of importers, particularly oil marketing companies, fearing further fall of the rupee, dealers said. Banks also bought dollars on behalf of FPIs, looking to pull out funds from Indian markets, dealers said. The Nifty 50 and Sensex ended 1.8% and 1.9% lower, respectively, Tuesday. 

The dollar index rose as continued uncertainty over the West Asia conflict drove investors to the safe-haven asset, weighing on the local unit, dealers said. At 1530 IST, the dollar index was at 98.21, higher than 97.91 Monday and 97.84 on Friday. 

However, the central bank marked its presence in the spot market shortly after it opened, limiting losses for the Indian unit, dealers said. "RBI came in the morning and pushed the rupee to 95.40 around levels, but then buying came in," a dealer at a private-sector bank said. "RBI kept the support at different levels through the day I think."

FORWARDS

The one-year dollar-rupee forward premium rose for the third consecutive trading day as the rupee's fall to a record low prompted banks to buy dollars on behalf of importers, who fear further weakness for the Indian currency, dealers said. "We are naturally seeing lots of paying in forwards. I think this will continue till the time rupee is under pressure," a dealer at a brokerage firm said. 

However, a rise in US Treasury yields limited gains for the forward premiums, they said. The 10-year US bond yield rose to 4.42% Monday from 4.38% Friday. 

The one-year exact period dollar-rupee forward premium was 3.25% at 1530 IST, up from Monday's close of 3.17%. On an absolute basis, the premium was 310.93 paise, against 301.43 paise Monday.

OUTLOOK

The rupee will continue to take cues from movement in crude oil prices Wednesday as the war in West Asia and the peace negotiations between the US and Iran continue to evolve, dealers said. If crude prices rise above $110 per barrel, market participants expect the rupee to fall past the psychologically-crucial 96.00 mark. 

The local unit will also take cues from movements in the dollar index. Market participants expect importers, particularly oil marketing companies, to continue buying dollars, fearing rupee depreciation amid uncertainty over the situation in West Asia.

Continued FPI outflows from Indian markets is also expected to pressure the Indian unit. FPIs have pulled out funds worth over $21 billion from domestic markets since the start of the war in West Asia. 

While most dealers expect the RBI to continue selling dollars to support the rupee, they don't expect the central bank to intervene aggressively. "Even if RBI intervenes heavily in the market, rupee will not change its course broadly. Buying (of dollars) will come in," a dealer at another private-sector bank said. Market participants will also look out for any announcement by the central bank to spur foreign inflows into India and support the rupee.

Dealers now see strong technical support for the Indian currency at 95.80 per dollar. The rupee is likely to move in a range of 95.30-95.80 against the dollar Wednesday. 

India Rupee - World FX: Yen dn; dlr up as Trumps rejects Iran peace proposal

MUMBAI – The Japanese yen erased early gains and fell to 157 a dollar after Japan's Finance Minister Satsuki Katayama confirmed, following a meeting with US Treasury Secretary Scott Bessent earlier in the day, that the two countries are coordinating closely on currency policy. The yen was down 0.3% against the dollar as news emerged that US President Donald Trump is considering restarting combat operations against Iran.

The dollar index rose as the West Asia crisis worsened. Trump has called Iran's response to a peace proposal from the US "a piece of garbage". He also indicated that the ceasefire hangs by a thread and has become more fragile than ever. The dollar index was 98.27 against 97.91 Monday and 97.84 Friday.

The British pound sterling fell against the dollar amid political uncertainty. The uncertainty stems from the growing clamour in the UK for Prime Minister Kier Starmer's resignation after the Labour Party was routed in local elections held recently. By the end of Monday, 79 Labour MPs had publicly demanded Starmer's resignation, including six ministerial aides who quit the government to back the mutiny. The pound sterling was down 0.2% against the dollar.

The euro was down against the dollar as investors sought the safe-haven currency with the growing uncertainty around the peace talks between the US and Iran dampening risk sentiment. The Canadian dollar was down 0.2% against the dollar while the Swedish krona was down 0.1% against the greenback.  (Suryash Kumar)

India Rupee: Premium up as importers buy forward dollars after rupee hits record low

MUMBAI – The one-year dollar-rupee forward premium continued to rise for the third consecutive trading day as the rupee's fall to a record low prompted banks to buy dollars on behalf of importers, who fear further weakness for the Indian currency, dealers said. The rupee fell sharply to a record low of 95.7400 a dollar Tuesday as Brent crude oil prices continued to rise amid the uncertainty over the peace agreement between the US and Iran, they said.

"The premiums can rise further with crude prices remaining high as the pressure to fund the BoP (Balance of Payments) gap increases," said a dealer at a private-sector bank. At 1330 IST, Brent crude oil for delivery in July traded at $106.39 per barrel, up over 2%.

"If the dollar-rupee is going down in the spot, usually the premiums will rise in the forward market. That's the tendency of forward premiums," another dealer at a private-sector bank said.

However, a rise in US Treasury yields limited gains for the forward premiums, they said. The 10-year US bond yield rose to 4.42% Monday from 4.38% Friday. 

The one-year exact period dollar-rupee forward premium was 3.23% at 1324 IST, up from Monday's close of 3.17%. On an absolute basis, the premium was 308.93 paise, against 301.43 paise Monday.  (Suryash Kumar)

India Rupee: Falls to record low as oil above $106/bbl, importers buy dollars

MUMBAI – The rupee hit a record low of 95.7250 a dollar as Brent crude oil prices rose above $106 a barrel with a peace agreement between the US and Iran stuck in a limbo, dealers said. Persistent dollar buys by banks on behalf of importers also weighed on the Indian unit, adding to depreciating pressure on the local currency.  

US President Donald Trump Monday said that the ceasefire with Iran was "on life support". At 1310 IST, Brent crude oil for delivery in July traded at $106.39 per barrel, up over 2%.

However, losses for the Indian unit were limited as state-owned banks sold dollars, likely on behalf of the Reserve Bank of India, dealers said. "The weakness in the rupee will continue unless there's some good news emerging from West Asia," a dealer at a state-owned bank said. "The rupee can also appreciate if there's selling of dollars, but that won't happen. Even if selling happens, it would be to curb the volatility, not to protect any levels." 

Further, heavy demand for dollars by importers, especially oil importers, continued to weigh on the rupee, dealers said. "The escalating situation in West Asia has sent crude prices up and the oil importers fear that crude oil prices could go up even further, which is why the demand for dollars at current levels exist," a dealer at a private-sector bank said.

For the rest of the day, the rupee is seen moving in the range of 95.25-95.80 a dollar. Dealers see strong technical support for the rupee at 95.80 a dollar.  (Suryash Kumar)

India Rupee: Technical levels for rupee - May 12

MUMBAI – At 1105 IST, the rupee was at 95.5275 a dollar. At 0900 IST, the rupee was at 95.5000 a dollar, against the previous close of 95.3100. Following are the key support and resistance levels for the rupee as provided by leading banks and brokerages

(Pratiksha and Suryash Kumar)

India Rupee: Hits record low on fragile US, Iran ceasefire; RBI limits fall

MUMBAI –  The rupee fell sharply to a record low against the dollar Tuesday as Brent crude oil prices rose amid concerns that the ceasefire between the US and Iran may collapse, dealers said. The Indian currency fell to a record low of 95.6300 a dollar. 

US President Donald Trump Monday warned that the ceasefire with Iran looks difficult to sustain, calling Tehran's response to the US' peace proposal "a piece of garbage." "I would say the ceasefire is on massive life support, where the doctor walks in and says, 'Sir, your loved one has approximately a 1% chance of living'," he said.

At 0924 IST, Brent crude oil price for delivery in July traded at $105.03 per barrel, up nearly 1%. "The rupee is likely to stay weak against the dollar as high crude prices put downward pressure on the rupee," said a dealer at a private-sector bank. A sharp fall in domestic equities also weighed on the local unit, they said. 

However, losses for the Indian unit were limited as some public sector banks sold dollars, likely on behalf of the Reserve Bank of India, dealers said. The intervention by the central bank was relatively aggressive, they said. "We expect the rupee to be supported by the RBI. This should keep the rupee between 95.40 and 95.80," said another dealer at a privates-sector bank."

For the rest of the day, the rupee is seen moving between a range of 95.25-95.80 a dollar. Dealers see strong technical support for the rupee at 95.80 a dollar.  (Suryash Kumar)

India Rupee: Expected range for rupee - May 12

NEW DELHI – Following are the support and resistance levels expected for the rupee Tuesday, as forecast by leading banks and brokerages in an Informist Poll:

(Pratiksha)

India Rupee - Asia FX: Most down as oil up amid fragile US-Iran ceasefire

MUMBAI – Most Asian currencies were down against the dollar on Tuesday as US President Donald Trump's comments Monday suggested that the ceasefire between the US and Iran hangs by a thin thread, pushing crude oil prices higher. Trump warned that the ceasefire might end at any moment and that the truce was on "massive life support." "I would say the ceasefire is on massive life support, where the doctor walks in and says, ‘Sir, your loved one has approximately a 1% chance of living," he said.

At 0838 IST, the Brent crude oil price for delivery in July was trading at $105.06 per barrel, up nearly 1%.

The South Korean won was down 0.7% against the dollar, while the Thai Baht was down 0.3%. The Philippine peso was down 0.5% against the dollar, as the country's heavy reliance on energy imports makes it vulnerable to volatile crude oil prices.

The Malaysian ringgit was down 0.2% against the dollar. Bucking the trend, the Chinese yuan was the only major Asian currency that rose against the dollar. This comes ahead of a crucial meeting between Chinese President Xi Jinping and Trump this week. Yuan is also supported by news that there has been an increase in demand for the Chinese currency worldwide, with media reporting showing that by the end of March, central banks worldwide had drawn a total of 111.6 billion yuan ($21 billion) from the People's Bank of China's foreign-exchange swap lines, the highest level since March 2024.  (Suryash Kumar)

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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