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Informist, Tuesday, Aug. 25, 2026

MUMBAI – The rupee is expected to be steady against the dollar as crude oil prices remained firm at $92 per barrel despite US sanctions on Iran, dealers said. However, traders stayed cautious because of the uncertainty as the recent US sanctions could speed up or delay the end to the US-Iran war and subsequently the reopening of the Strait of Hormuz.

"Risk to the supply of crude oil from the Middle East will be elevated now and may dry down supply in short term. Hence, it is negative rupee in shorter end. Only progress in peace talks will help rupee substantially," a dealer at private sector bank said. 

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 Tuesday after settling at 95.7450 Monday. Despite high dollar demand from importers due to month-end payment obligations, dealers expect the Reserve Bank of India to keep supporting the rupee and maintain stability Tuesday. 

Crude oil prices were on upward pressure as the US intensified economic pressure on Iran and its trading partners in an effort to force the reopening of the Strait of Hormuz. Treasury Secretary Scott Bessent announced plans to isolate Iran through sanctions targeting countries that continue doing business with the Islamic Republic, while President Donald Trump said those nations would be given a specific timeline to sever ties with Tehran or face unilateral US penalties. At 0800 IST, Brent crude for October was at $92.45 per barrel, slightly up from $92.17 Monday. 

The dollar index struggled to hold on to its gains and hovered near 99 following the US Treasury's decision to double buyback operations for longer-dated bonds, with reports suggesting Secretary Scott Bessent could use nearly $1 trillion from the Treasury's General Account to help fund them. At 0800 IST, the index was at 99.00, slightly up from 98.98 on Monday. 

Banks may also buy dollars for importers actively due to their month-end payment obligations, which will weigh on the Indian unit, they said. However, the central bank's firepower to intervene in the market has risen with robust inflows into foreign currency non-resident (bank) deposits, they said, which is expected to keep the rupee range bound. 

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% Tuesday. On Monday, it settled at 2.92%. On an absolute basis, the premium ended at 279.60 paise.

End

US$1 = INR 95.7450

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

Edited by Akul Nishant Akhoury

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