Rupee Holds Near 95.70 as RBI Support Meets Oil Risk

The Indian Rupee held steady against the US Dollar on Monday, August 24, 2026, supported by strong capital inflows and expectations of Reserve Bank of India (RBI) intervention, with the USD/INR pair trading around 95.70, according to FXStreet.

Traders remain attentive to fluctuating oil prices and the possibility of RBI action, even as the central bank reported accumulating nearly $73 billion under capital-inflow initiatives launched in June to reinforce India's balance of payments, pushing foreign exchange reserves near record levels.

Capital inflows and RBI support

The RBI's weekend report detailed that it had built up nearly $73 billion through programs introduced in June to shore up India's balance of payments. The accumulation has helped push the country's foreign exchange reserves close to record levels, giving the central bank ample room to cushion the rupee against external shocks.

According to FXStreet, pressure on the rupee temporarily eased alongside a dip in crude oil prices as investors took profits ahead of expected US announcements on stricter sanctions against Iran. However, crude prices threaten to rebound after US Treasury Secretary Scott Bessent signalled Washington's plans to impose unprecedented sanctions on Iran, a development that could weigh on India as one of the world's largest crude importers.

Rate Outlook Shifts

Analysts at MUFG/BTMU pointed to a notable shift in the RBI's policy communication. They said the August monetary policy committee minutes were more hawkish than the actual policy meeting and what markets expected, adding that the minutes suggest the RBI has reached the end of its easing cycle, with the next move more likely higher than lower.

The assessment reinforces a view that the central bank is poised to pivot away from accommodation and toward rate hikes in the coming months, a stance that could support the rupee over the medium term.

Equities and Dollar Dynamics

Indian equity markets opened slightly higher on Monday after enduring two straight weeks of losses. Last week, the Nifty 50 and BSE Sensex declined by 0.5% and 0.6% respectively, hit by rising crude prices and climbing bond yields amid escalating Middle East tensions.

Meanwhile, the USD/INR pair drifted downward as the US Dollar faced pressure from fresh fiscal policy moves in Washington. The US Treasury Department surprised markets by announcing plans to at least double its buybacks of longer-dated government debt to curb rising bond yields, a move contributing to US Dollar weakness that aided the rupee.

Separately, Reuters reported under the news identifier newsml_L4N44L0BT that the rupee was little changed, caught between elevated oil prices and support from the RBI. Market sentiment is expected to remain cautious as investors digest the details of the newly announced US sanctions.