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Informist, Wednesday, May 27, 2026

By Divya Moolyattil

MUMBAI – The rupee erased earlier losses and closed steady against the dollar Wednesday as the Reserve Bank of India likely intervened actively by the way of dollar sales through state-owned banks and also as Brent crude prices fell, dealers said. The Indian unit started the day on a weaker footing as the market remained cautious amid mixed signal on the US-Iran peace deal, but it did not breach the 95.80 level, likely due to the RBI's intervention, dealers said.

"After the buy-sell swap auction on Tuesday, the RBI was selling (dollars) in market today (Wednesday) at multiple levels, at 95.78, 95.76 (a dollar). The rupee is mostly unchanged because of intervention," a dealer at a priavate sector bank said. The RBI likely sold nearly $2 billion in the spot market Wednesday, dealers said.

Crude oil prices fell sharply Wednesday as investors were still hopeful of a peace deal between the US and Iran even after fresh hostilities in West Asia on Tuesday. Iranian officials Wednesday denounced the "gross violations" of the fragile ceasefire by the US saying there's "zero trust" after it attacked southern Iran on Tuesday. At 1530 IST, Brent crude oil prices for July delivery were $96.63 a barrel, down from $99.58 Tuesday. Brent crude rose to a high of $100.67 a barrel Tuesday. 

The Indian unit hit a low of 95.7925 a dollar during day but went on to settle at 95.6900 a dollar on Wednesday, almost flat against 96.6800 a dollar on Tuesday. Most Asian currencies rose 0.1-0.6% against the dollar, with the South Korean won being the best performer Wednesday.  

The Indian currency was also under pressure as banks bought dollars on behalf of oil marketing companies and other importers, fearing further depreciation of the rupee, dealers said. The Indian currency fell to a record low of 96.9600 a dollar last week. "There was some buying (of dollars) in the market, importers were closing the short (dollar) positions today," a dealer at another private sector bank said. 

Lack of foreign portfolio inflows into Indian markets is also a pain point for the rupee, dealers said. India has seen strong FPI outflows ever since the war in West Asia broke out late February. So far in May, FPIs have pulled out $2.30 billion worth of funds from Indian markets. 

A slight fall in the dollar index during European trading hours supported the Indian unit, dealers said. At 1530 IST, the dollar index was at 99.13, up from 99.14 Tuesday. The index fell to 99.04 during the day. 

FORWARDS

Dollar-rupee forward premiums fell across tenures, with the one-year premium ending at an over 2-week low, as the RBI likely sold dollars for forward delivery to neutralise its spot interventions and avert pushing out rupee liquidity, dealers said. The RBI likely sold forward dollars for maturity in 6 to 18 months, they said

Some dealers said forwards premium fell sharply on expectations of some new measures from the central bank to curb the volatility in the currency market and support the rupee. "Market participants are expecting the RBI to roll out measures before or in the monetary policy meeting," a dealer at a private sector bank said. The RBI's Monetary Policy Committee will give out interest rate decision on Jun. 5. 

However, a fall in US Treasury yields limited a further drop in the premiums, dealers said. The US Treasury yield fell to 4.47% Wednesday from 4.48% Tuesday.  

At 1530 IST, the one-year exact period dollar-rupee forward premium was 3.11%, sharply down from Tuesday's close of 3.30%. On an absolute basis, the premium was 297.28 paise, against 317.45 paise Tuesday.

OUTLOOK

The foreign exchange market is closed on Thursday for Bakri Id. On Friday, the rupee will take cues from movements in crude oil prices amid evolving developments in the peace deal between the US and Iran. "Due to the uncertainty in West Asia, it is difficult to say what will happen. But the rupee is likely to be range bound for Friday as the market is expecting measures from the RBI soon," a dealer at a private sector said.  

Market participants will also look out for any announcement by the central bank to spur foreign inflows into India and support the rupee. Informist had reported earlier in May that the RBI and the finance ministry have received proposals from market participants to lower the withholding tax rate on government bonds to attract foreign investment and help protect its foreign exchange reserves. Some market participants are also expecting the RBI to attract dollar inflows into the country through the Foreign Currency Non-Resident (Banks) and Non-Resident External deposit routes. 

The rupee is unlikely to test the 96.00-a-dollar level unless negative news emerges on the war front, some dealers said. "I expect the rupee to depreciate, but it may not cross 96.00 this week," the dealer said. However, most dealers expect the RBI to continue intervening by selling dollars if the Indian unit comes under pressure.

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 95.50-96.00 against the dollar Friday.

India Rupee - World FX: New Zealand dollar surges on rate hike hopes

MUMBAI – The New Zealand dollar surged 0.8% against the greenback after its central bank held rates steady on Wednesday, but a split vote underscored a ‌narrow decision, as policymakers warned rates will need to rise sooner and by more than expected to counter an energy shock rippling through the global economy.

The Australian dollar was down 0.4% against the US dollar after data showed the annual inflation rate cooled to 4.2% in April from 4.6% in March and below analysts' forecasts of 4.4%.

The dollar index was broadly steady on Wednesday as investors assessed further developments related to the flare-up in West Asia. The US Tuesday attacked the southern part of Iran and Iranian boats. Iran has threatened to retaliate since it considers the recent attack by the US a violation of the ceasefire. At 1405 IST, the dollar index was 99.09 against 99.14 Tuesday and 99.01 Monday.

The Japanese yen hit its lowest level in nearly a month, sparking expectations of intervention by the Bank of Japan. Bank of Japan Governor Kazuo Ueda struck a somewhat hawkish tone on Wednesday, saying the war-driven oil shock could become persistent amid high inflation expectations and rising wages.

The euro was down 0.1% against the dollar. The pound sterling was 0.1% lower against the dollar as hopes of a Bank of England rate hike dwindled, with two-year bond yields falling to 4.29% on Tuesday from 4.58% last week.

The Swiss franc was marginally lower against the dollar, as low inflation and the central bank's signalling of intervention to support the franc have kept investors away from the currency. The Canadian dollar was marginally higher against the US dollar, while the Swedish Krona was 0.2% higher against the US dollar. (Suryash Kumar)

India Rupee: Premiums dn; RBI sells fwd dlrs to avert rupee liquidity drain

--Dealers: RBI likely conducting dlr-rupee buy-sell swaps maturing 6-18 mos 

--Dealers: RBI sells fwd dlrs to offset rupee liquidity drain from spot sales

--Dealers: FX fwd premiums fall across tenures as RBI likely sells fwd dlrs 

--1-year dollar-rupee forward premium 3.13% vs 3.31% Tue 

MUMBAI - Dollar-rupee forward premiums fell across tenures Wednesday as the Reserve Bank of India likely sold dollars for forward delivery to neutralise its spot interventions and avert pushing out rupee liquidity, dealers said. The RBI likely sold forward dollars for maturity in 6 to 18 months, they said

"RBI is selling dollars in the forward market, which is why premiums are down," a dealer at a foreign bank said.

The rupee fell to a low of 95.7925 a dollar on Wednesday. However, losses for the Indian unit were limited as the RBI likely intervened through dollar sales, dealers said.

Considering spot dollar sales drain out rupee liquidity from the banking system, the RBI conducts buy-sell swaps to replenish liquidity. A buy-sell swap entails buying dollars for immediate delivery and entering into a contract to sell these at a future date, thereby postponing the drain on systemic liquidity. 

The one-year dollar forward premium fell to an over two-week low of 3.12% or 298.79 paise on Wednesday. However, the fall in premium was limited due to a decline in the 10-year US treasury yield to 4.50% Tuesday from 4.56% Friday. The 10-year US treasury yield fell Tuesday as inflation concerns eased after crude oil prices fell amid growing hopes of a peace deal between the US and Iran.

At 1313 IST, the one-year exact period dollar rupee forward premium was 3.13%, down from 3.31% Tuesday. On an absolute basis, the premium was 299.79 paise, against 317.45 paise at close Tuesday. (Suryash Kumar)

India Rupee: Erases some losses on RBI's likely dlr sales; W Asia war weighs

--Dealers: Some PSU banks' dollar sales, likely for RBI, limit rupee's fall 

--Dealers: Some PSU banks selling dollars, likely for RBI, around 95.79/$1 

MUMBAI – The rupee gave up some early losses against the dollar Wednesday as state-owned banks sold dollars, likely on behalf of the Reserve Bank of India, dealers said. The rupee fell to a low of 95.7925 a dollar during the day, a level around which the RBI likely intervened, dealers said.

The rupee fell as investors' optimism about a peace deal between the US and Iran faded, after Tehran threatened to retaliate after recent attacks by the US in the southern part of Iran.

While crude oil prices eased Wednesday, banks stepped in to buy dollars on behalf of oil importers, which also weighed on the Indian unit, dealers said. Oil importers may like to buy dollars at the current levels fearing a further rise in oil prices in the future, a dealer at a private sector bank said.

At 1218 IST, Brent crude oil for delivery in July traded at $97.99 per barrel, down from $99.58 per barrel Monday. Dealers said importers also bought dollars fearing further depreciation of the rupee going ahead. The Indian currency fell to a record low of 96.9600 last week.

For the rest of the day, the rupee is seen moving in the range of 95.60-96.00. Dealers see immediate technical support for the rupee at 95.80 a dollar, a break of which may drag the rupee towards 96.00 (Suryash Kumar)

India Rupee: Falls on worries over West Asia war; RBI intervention expected

MUMBAI – The rupee fell against the dollar Wednesday as investors remain uncertain about the prospect of a peace deal between the US and Iran after the recent escalation in tensions between both countries, dealers said.

Iran has threatened to retaliate after the US Tuesday struck Iranian boats and the southern part of Iran, reports said. Brent crude oil prices for delivery in July traded at $98.12 per barrel at 0926 IST, up from the low of $97.12 per barrel Tuesday. However, Brent crude oil remained lower than $99.58 per barrel at close on Tuesday.

Dealers expect the rupee to remain weak unless there's some positive development around the US-Iran peace negotiations. "Fundamentally, we stay the same. Crude oil prices will continue to influence the rupee movement," a dealer at a foreign bank said.

Given the sustained pressure on the Indian currency, dealers expect public sector banks to sell dollars on behalf of the Reserve Bank of India around 96 a dollar to support the rupee. "There could be support by the Reserve Bank of India for the rupee if it touches 96 a dollar mark," a dealer at a private sector bank said. "However, the intervention shouldn't be aggressive," the dealer added.

During the day, dealers expect buying of dollars by banks on behalf of importers, especially oil importers, fearing further depreciation of the rupee going ahead. For the rest of the day, the rupee is seen moving in the range of 95.60-96.00. Dealers see immediate technical support for the rupee at 95.80 a dollar, a break of which may drag the rupee towards 96.00. (Suryash Kumar)

India Rupee: Expected range for rupee - May 27

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

US$1 = INR 95.68

Compiled by Pratiksha and Suryash Kumar

India Rupee - Asia FX: Mixed on weak risk sentiment amid West Asia crisis

MUMBAI – Asian currencies were mixed Wednesday as investors closely tracked developments in West Asia after the US Tuesday attacked Iran. Iran has threatened to retaliate as it sees the attacks by the US as a violation of the ceasefire that is in place in the region since Apr. 8. The dollar index was marginally down as investors hoped an agreement to end the war is still possible.

US Secretary of State Marco Rubio said an agreement with Iran was still possible, adding that President Donald Trump wanted to either "make a good deal" or no deal at all. The dollar index was at 99.09 against 99.14 Tuesday and 99.01 Monday.

The Indonesian rupiah was down 0.2% against the dollar with higher US yields and crude oil prices weighing on the currency. The Philippine peso was marginally down against the greenback as high crude oil prices put pressure on the Philippine economy, which is mostly dependent on oil imports for its energy needs.

The Malaysian ringgit was down 0.1% against the dollar as uncertainty around the US-Iran peace deal grew, with the US Tuesday attacking Iranian boats and the southern part of Iran. The Taiwanese dollar and Chinese yuan were both marginally up against the dollar. (Suryash Kumar)

End

US$1 = INR 95.6900

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

Edited by Akul Nishant Akhoury

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