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Informist, Friday, Aug. 21, 2026

By Divya Moolayattil

MUMBAI – The rupee is expected to fall slightly against the dollar Friday as crude oil prices remain above $93 per barrel and the US prepares to impose economic sanctions on Iran. Brent crude is on track for a second consecutive weekly gain, rising more than 5% so far this week as the US and Iran showed no signs of progress towards ending the war and reopening the Strait of Hormuz.

The rupee is likely to open steady, but intraday pressures are expected to weigh it down as the session progresses. The rupee is likely to open around 95.68-95.72 per dollar, and is expected to move in a range of 95.60-95.80 Friday after settling at 95.7050 Thursday. Dealers expect the rupee to trade in a narrow range unless major outflows occur. 

Most Asian peers consolidated Friday as the dollar index held steady around 98.8, near its lowest level in three months, likely supporting the Indian unit as well. 

Following the pattern of the last two weeks, the Reserve Bank of India is expected to intervene to keep the pressured rupee stable. Market dealers said that the RBI will continue defending the 95.90 to 96.00 levels on Friday.

"The RBI is expecting at least $80 billion from its foreign currency mobilisation measures, the external buffer should remain supportive of the INR. However, the record forward position and associated liquidity management suggest that the RBI will continue to prioritise orderly currency movements rather than outright appreciation," MUFG said in a note Friday. 

Dollar purchases by banks on behalf of importers on every dollar-rupee dip amid rising crude oil prices are expected to put further pressure on the currency. Thursday, the rupee erased most gains as importers bought dollars during the last leg of the trade. 

US bond yields advanced on Thursday, with the yield on the 10-year Treasury note climbing back above the level it was at just before the Treasury Department said Wednesday that it will at least double repurchases of long-term bonds in the next few months, putting pressure on the Indian currency. The US Treasury yield on the 10-year note rose to 4.7%, 5 basis points away from the 20-month high hit this week. 

Meanwhile, India on Thursday eased rules for export payments made in rupees, putting them on par with foreign-currency earnings for trade-policy benefits in a bid to promote the local currency's use in global trade. Market dealers noted there will be no immediate impact on the currency, adding that broader adoption will depend entirely on overseas buyers.

FORWARDS 

The one-year dollar-rupee forward premium is expected to rise as banks may buy dollars for forward delivery on behalf of importers, dealers said.

On an annualised basis, the premium on the one-year exact-period dollar-rupee forward contract is seen at 2.85-2.95% Friday. On Thursday, it settled at 2.89%. On an absolute basis, the premium ended at 276.79 paise.

End

US$1 = INR 95.7050

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

Edited by Saji George Titus

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