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Informist, Monday, Oct. 5, 2026

MUMBAI – The rupee is expected to rise slightly against the dollar Monday, following a sharp depreciation in the previous trading session, as crude oil prices fell slightly and an unexpectedly weak September US jobs report put the brakes on the expectation of rate hike by the Federal Reserve in October. However, markets continued to monitor rising tensions in West Asia, supply disruption through the Strait of Hormuz, and elevated US Treasury yields, which is likely to put pressure on the Indian unit, dealers said. 

The rupee is expected to open around 96.20 a dollar Monday after it settled at a two-month low of 96.3150 a dollar Thursday. The foreign exchange market was shut on Friday due to Gandhi Jayanti. The local currency is expected to move in the range of 95.95-96.40 during the day, dealers said. However, it is unlikely that the Indian unit will settle below 96 despite the Reserve Bank of India's intervention, dealers said.

Brent Crude oil prices fell slightly in early trade Monday as major OPEC members and allies agreed over the weekend to leave production quota unchanged next month amid prolonged supply disruptions. However, the rising tension in West Asia continues to pose risk to the appreciation of the rupee.

The head of Yemen's governing council ‌announced the start of major military operations to retake territory held by the Iran-backed Houthis. Meanwhile, Iran's top negotiator Mohammad Bagher Ghalibaf said Tehran has received a response from the US on its proposal to end the war but warns that the "era of wasting time and dictating unilateral demand is over." He also said the "Strait of Hormuz will not open until our seven conditions" are met. At 0800 IST, Brent crude oil for November delivery was $101.36 a barrel, down from $102.25 Friday. 

The dollar index recovered from its sharp fall seen on Friday after Treasury yields hovered near the 24-year high level seen in the previous week. At 0800 IST, the dollar index was 102.17, up from 101.88 Friday. 

Meanwhile, the US September nonfarm payrolls rose by 29,000, weaker than the expectations of 90,000, and August payrolls were revised lower to 133,000 from the originally reported 162,000, data released Friday showed. The weaker-than-expected jobs data sharply reduced bets on an October Federal Reserve interest rate hike by 22% from 64% a week ago. 

On the domestic front, banks may continue to buy dollars for importers, which could weigh on the Indian unit. Foreign portfolio outflows are also likely to put pressure on the rupee. So far in 2026, FPIs have  net pulled out $22.27 billion from Indian markets, more than double the $10.92 billion they pulled out in the whole of 2025. In September, FPIs withdrew over $6.5 billion worth of funds from the domestic market.

Dealers expect the RBI to support the dollar and prevent sharp depreciation of the Indian unit. 

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 3.30-3.40% on Monday. On Friday, it settled at 3.29%. On an absolute basis, the premium ended at 317.30 paise.

End

US$1 = INR 96.3150

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

Reported by Divya Moolayattil

Edited by Akul Nishant Akhoury

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