Rupee Hits Two-Week High as RBI Defends 97 Mark

The Indian rupee extended its winning streak to a third consecutive session, strengthening to around 95.68 per US dollar and touching a two-week high, as persistent central bank intervention and a sharp retreat in crude oil prices lifted the currency ahead of policy decisions from the Federal Reserve and the Reserve Bank of India.

The recovery marks a sharp turnaround from late last week, when the rupee threatened to breach the 97-per-dollar level. The RBI reportedly sold dollars for a second straight session after defending that threshold, triggering stop-losses on long-dollar positions and propelling the rupee to its biggest single-day advance in roughly six weeks on Monday.

RBI Draws a Line at 97

The central bank's determination to hold the 97-per-dollar line has become increasingly visible. On Friday, July 24, the rupee closed at 96.55, recovering 18 paise from Thursday's close of 96.73, after opening weaker at 96.81 as Brent crude spiked above $100. Forex traders said RBI intervention via state-owned banks prevented a much larger depreciation.

The RBI sold dollars through public-sector banks, absorbing heavy demand while limiting the visible reserves drawdown. The intervention came as Foreign Institutional Investors (FIIs) continued exiting Indian equities, offloading ₹2,999.23 crore on July 23. The Sensex fell 0.43% on Friday, closing at 76,059.77 in its fifth straight session of declines.

Oil Retreat Provides Breathing Room

Brent crude fell 1.5% to $87.06 per barrel after plunging 8.7% in the previous session, as a pause in US strikes on Iran raised hopes for a diplomatic resolution. The decline directly eases pressure on India's oil import bill. Just days earlier, on July 24, Brent had been trading around $100.4 to $100.8 per barrel in futures.

Dollar Strength Caps the Rally

Further appreciation has been limited by a firmer US dollar. The dollar index hovered near a one-month high as traders priced in roughly a one-in-three chance of a Federal Reserve rate hike ahead of Wednesday's policy decision, even though markets broadly expect rates to remain unchanged. On Friday, the dollar index was marginally lower at 101.38.

The USD/INR exchange rate rose to 95.8320 on July 29, up 0.24% from the previous session, reflecting the tug-of-war between supportive domestic factors and external dollar strength.

A Longer Road to Recovery

Despite the rally, the rupee remains under pressure over a longer horizon, weakening 1.41% over the past month and 9.30% over the last 12 months. The USD/INR pair reached an all-time high of 99.82 in March 2026, and structural headwinds, including elevated crude prices, sustained FII outflows, and geopolitical uncertainty, have not disappeared.

With both the Federal Reserve and the RBI set to announce policy decisions this week, traders are watching for any shift in tone that could alter the interest rate differential.