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Informist, Tuesday, Aug. 11, 2026

By Divya Moolayattil

MUMBAI – The rupee is expected to open steady and subsequently fall slightly against the dollar Tuesday as crude oil prices held steady at more than one-week high due to uncertainty around the reopening of the Strait of Hormuz. The steady prices followed after Brent crude oil surged over 5% to the highest level since Jul. 31. Brent crude oil for October delivery was $87.91 per barrel, slightly up from $87.72 Monday, but sharply higher from $83.55 Friday.

However, the weaker dollar index is likely to limit the fall of the Indian currency. The index hit a one-week low of 99.72 in early trade Tuesday as the US economy unexpectedly ‌lost jobs in July, as per data released Friday, dashing expectations of rate hikes by the US Federal Reserve next month. 

The rupee is expected to open broadly steady around 95.35 a dollar Tuesday, after settling at 95.30 on Monday. The Indian unit may move in a range of 95.20-95.60 against the dollar during the day. "Crude has bounced back from 80 ($/per barrel) last week to 87, so, we have to factor rupee depreciation to 95.60 (a dollar)," a dealer at a private-sector bank said. The rupee is expected to move range bound till 95.50, after which it may get good support from the Reserve Bank of India, dealers said.

The RBI is likely to sell dollars through state-owned banks to prevent the Indian unit's sharp depreciation. Dealers said the RBI has got the muscle to intervene in the market due to robust dollar inflows into foreign currency non-resident (bank) deposits. Foreign fund inflows into the schemes announced by the RBI attracted $40.82 billion from Jun. 8 to Jul. 31, of which $36.73 came from FCNR (B) deposits.

Dealers expect importers to buy dollars actively, fearing further depreciation of the rupee amid uncertainty about the reopening of the strait. Iran's Supreme Leader Mojtaba Khamenei announced several new key appointments Tuesday, including naming a former wartime commander and veteran political insider to head the nation's highest security body, which dampened hopes of investors of a near-term end to the war. 

Traders await the US and India inflation data, due Wednesday, for more cues on the interest rate path of both economies. Economists expect India's headline inflation in July to remain steady at 4.4% despite higher food prices caused by deficient rainfall across the country, according to an Informist Poll.

FORWARDS

The one-year dollar-rupee forward premium is expected to rise as banks may buy dollars for forward delivery on behalf of importers, fearing further weakness of the Indian unit, dealers said. Banks may also sell forward dollars on behalf of foreign investors, to hedge against the depreciation of Indian currency, dealers said. Foreign portfolio investors bought INR 19.75 billion shares on Monday. 

On an annualised basis, the premium on the one-year exact-period dollar-rupee forward contract is seen at 2.74-2.85% Tuesday. On Monday, it settled at 2.77%. On an absolute basis, the premium ended at 263.67 paise. 

End

US$1 = INR 95.30

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

Edited by Akul Nishant Akhoury

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