More Stories

Informist, Tuesday, May 26, 2026

 

By Divya Moolayattil

 

MUMBAI – The rupee fell against the dollar Tuesday after rising for three straight sessions as fresh hostilities in West Asia pushed up crude oil prices and dampened investors' risk appetite, dealers said. Persistent dollar purchases by banks on behalf of oil marketing companies also weighed on the local unit, they said. 

 

"The market will be volatile till there is uncertainty about what will happen on the global front," a dealer at a private-sector bank said. "There was huge dollar demand from importers, which added pressure during the last leg of trade." 

 

The Indian unit settled at 95.6800 a dollar, 0.5% lower than its previous close, after hitting a high of 95.3500 Tuesday. The rupee moved within a 34-paise range during the day. At Tuesday's close, the domestic unit was still 1.3% higher than the record low of 96.96 per dollar hit last week. Most Asian currencies fell against the dollar, with the Indian unit and Thai Baht being the worst performers Tuesday. 

 

The Indian unit started the day on a weaker footing against the dollar as Brent crude oil prices neared the $100 per barrel mark after the US attacked Iranian ships attempting to lay mines in the Strait of Hormuz. Iran retaliated by launching missiles at US planes, which prompted the US to attack missile launchers near Bandar Abbas in Iran, according to media reports. At 1530 IST, Brent crude oil prices were $99.18 per barrel, up from $96.14 Monday but down from $103.54 Friday.

 

The rupee remained below 95.45 per dollar until around 1300 IST, as state-owned banks sold dollars, likely for the Reserve Bank of India, they said. "There was a lot of short covering at the 95.45 level by the RBI for a very long time today, then it let loose once crude started going up," a dealer at a public-sector bank said. 

 

The rupee breached 95.45 per dollar and fell sharply during the last leg of trade as banks rushed to buy dollars on behalf of oil marketing companies and other importers, fearing further rupee depreciation amid rising oil prices, dealers said. "The oilers (oil marketing companies) came in during the last hour, the demand was so high that it moved nearly 30 paise," the dealer said. 

 

The dollar index was marginally higher during European trading hours, further weighing on the Indian unit, dealers said. At 1530 IST, the dollar index was at 99.03, up from 99.01 Monday. A sharp fall in domestic equity indices also pressured the rupee lower. On Tuesday, the Nifty and Sensex closed 0.5% and 0.6% lower, respectively. 

 

	AT 1530 IST	AT 0900 IST	HIGH	LOW	PREVIOUS(AT 1530 IST)
Spot rupee per $1	95.6800	95.3800	95.3500	95.6900	95.2300
1-year dlr/rupee fwd (paise)	317.45	318.00	323.57	314.57	319.00

 

FORWARDS

The one-year dollar-rupee forward premium fell Tuesday after the result of the Reserve Bank of India's three-year, dollar-rupee buy-sell swap auction was announced. The central bank conducted a $5 billion buy-sell swap auction between 1030 IST and 1130 IST using the multiple-price method. The RBI set a cut-off premium of 910 paise at the auction. Under the buy-sell swap, the RBI bought dollars for immediate delivery and will sell them for delivery after three years. The median of an Informist poll of 16 foreign exchange dealers had seen the cut-off premium at 900.00 paise.

 

"One of the motives of the swap auction was to bring the forwards down. Demand was high in the auction. There was a lot of receiving in forwards, which reduced the hedging costs," a dealer at a private sector bank said.

 

A rise in US Treasury yields also weighed on forward premiums, they said. The 10-year US bond yield rose to 4.51% on Tuesday, up from 4.49% on Monday. However, the rise in premiums was limited, as banks sold forward dollars to importers who feared further depreciation in the rupee, they said.

 

At 1530 IST, the one-year exact-period dollar-rupee forward premium was 3.31%, down from 3.35% on Monday. On an absolute basis, the premium was 317.45 paise, against 319.00 paise at close Monday.

 

OUTLOOK

On Wednesday, the rupee will take cues from movement in crude oil prices and developments in peace talks between the US and Iran, dealers said. Dealers expect importers to continue buying the dollar, which may weigh on the Indian unit. Persistent foreign portfolio outflows from the equity market may also add pressure on the Indian unit. However, most dealers expect the RBI to continue intervening by selling dollars to curb the volatility.

 

"Overnight developments in war will decide the direction of the rupee, but nothing positive is likely soon. I expect the rupee to gap up around 15 paise tomorrow (Wednesday), if the situation remains the same," a dealer at a foreign bank said.

 

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 95.40-95.80 against the dollar Wednesday.  End

 

US$1 = INR 95.6800

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

 

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.