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Informist, Thursday, Oct. 1, 2026

By Divya Moolayattil

MUMBAI – The rupee is expected to fall against the dollar Thursday as crude oil prices remained elevated, the dollar index rose sharply, and US Treasury yields climbed to multi-decade highs amid concern that persistent energy-driven inflation could lead to tighter monetary policy, dealers said.

Strong dollar demand from importers and foreign fund outflows may put pressure on the Indian unit and push it below 96 per dollar during the day. Foreign portfolio investors net sold $5.54 billion from Indian markets as of Sept. 29, after investing in the previous three months. However, dollar sales by the Reserve Bank of India may keep the rupee supported around 96 per dollar.

"The RBI may sell dollars and keep the rupee at the same level (USD/INR below 96) before the monetary policy meeting and the rupee may rise around 15-25 paise if the RBI hike rates by 25 basis points," a dealer at a private sector bank said.

The rupee is expected to open around 95.98 per dollar after settling at 95.8300 a dollar in the previous session. The local currency is expected to move in the range of 95.80-96.15 during the day, dealers said.

Most Asian currencies also fell sharply against the dollar in early trade Thursday, with the Thai baht leading the losses.

At 0800 IST, Brent crude oil for December delivery was at $98.08 a barrel, up from $97.43 at the end of Indian foreign exchange market hours Wednesday. Despite Saudi Arabia restoring half the capacity of its East-West pipeline, uncertainty over a peace deal between the US and Iran kept the market cautious. Meanwhile, Iranian government spokesperson Fatemeh Mohajerani said Tehran had received a US proposal regarding the reopening of the Strait of Hormuz.

The dollar index remained firm at a two-month high, while the yield on the benchmark 10-year US Treasury note rose to a multi-year high. The 10- and 30-year US Treasury yields traded around 5.3% and 5.64%, respectively, with both reaching levels not seen since 2002. At 0800 IST, the dollar index was at 101.58, sharply up from 101.19 at the end of Indian foreign exchange market hours Wednesday.

Meanwhile, data released Wednesday showed that the US personal consumption expenditures price index rose 0.3% in August, below expectations of a 0.4% increase. Core PCE rose 0.2%, also below the forecast of 0.3%. Markets now see roughly a 38% chance of a Federal Reserve rate hike in October, down from 51% before the PCE data. Investors now await weekly US jobless claims due Thursday and the September jobs report on Friday.

Meanwhile, the RBI's outstanding net short dollar position in the forward book surged to a record $200.06 billion at August-end from $136.77 billion at July-end, data released by the central bank on Monday showed.

FORWARDS

The one-year dollar-rupee forward premium is expected to rise Thursday as dealers expect the RBI to continue conducting dollar-rupee sell-buy swaps to drain surplus rupee liquidity from the banking system. The central bank likely bought dollars for forward delivery in the near tenures on multiple days, as per dealers. 

On an annualised basis, the premium on the one-year exact-period dollar-rupee forward contract is seen at 3.35-3.40% Thursday. On Wednesday, it settled at 3.35%. On an absolute basis, the premium ended at 321.17 paise.

End

US$1 = INR 95.83

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

Edited by Akul Nishant Akhoury

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