Mumbai: The Reserve Bank of India (RBI) is believed to have intervened in the foreign exchange market on Monday, August 24, as the Indian rupee remained under pressure near ₹95.64 against the US dollar amid geopolitical uncertainty, elevated oil prices and corporate demand for the American currency.
Five traders told Reuters that state-run banks were seen selling US dollars during early trading, an activity widely interpreted by market participants as intervention carried out on behalf of the RBI. The rupee was trading at around ₹95.6425 per dollar, remaining within a relatively narrow range.
RBI Seen Defending the Rupee
The RBI does not generally announce individual foreign exchange interventions in real time, meaning Monday’s action has not been formally confirmed by the central bank.
However, traders reported dollar selling by state-owned banks, which is often associated with RBI intervention in the currency market.
The apparent intervention helped prevent a sharper fall in the rupee despite persistent demand for dollars from companies and uncertainty in global markets.
The rupee had closed at approximately ₹95.6950 against the dollar on Friday, after declining around 0.3% over the previous week.
Why Is the Rupee Under Pressure?
Several factors are currently putting pressure on the Indian currency.
One of the biggest concerns is the continuing uncertainty surrounding the US-Iran conflict and Middle East energy supplies.
India imports nearly 90% of its crude oil requirements, making the economy particularly sensitive to increases in global oil prices. Higher crude prices increase India’s import bill and can create greater demand for US dollars from domestic companies.
Corporate hedging requirements and month-end dollar demand are also adding pressure to the currency.
Oil Prices Remain a Major Risk
Global crude prices have remained elevated amid geopolitical tensions.
Brent crude had gained nearly 7% during the previous week and was trading around the $94-per-barrel level, according to Reuters.
Higher oil prices can affect the rupee in multiple ways.
Indian refiners and importers need additional dollars to purchase crude oil, increasing demand for the US currency. Persistently expensive energy can also push domestic inflation higher and worsen India’s trade balance.
These factors make movements in international crude prices particularly important for the RBI and Indian currency markets.
Strong Capital Inflows Give RBI More Firepower
While the rupee faces external pressure, the RBI currently has a stronger financial buffer to manage currency volatility.
The central bank has attracted nearly $73 billion through measures introduced in June to strengthen India’s balance of payments, according to Reuters.
These inflows have helped lift India’s foreign exchange reserves close to record levels and have provided the RBI with greater capacity to sell dollars when necessary.
The central bank’s approach appears focused on preventing disorderly moves in the currency rather than maintaining a fixed exchange rate.
₹96 Per Dollar Seen as Important Level
The ₹96-per-dollar level has emerged as an important psychological marker for currency traders.
Recent RBI interventions have repeatedly helped prevent the rupee from weakening sharply beyond this area.
On Friday, frequent central bank intervention was credited with limiting losses and keeping the rupee stronger than ₹96 per dollar despite higher oil prices and strong importer demand.
Market participants also expect RBI presence around the ₹95.80 level, which has made traders cautious about aggressively betting against the rupee.
RBI Has Stepped Up Intervention in Recent Weeks
Monday’s suspected action follows a period of increasingly visible RBI involvement in currency markets.
In late July, bankers estimated that the central bank sold $8 billion to $9 billion across spot and non-deliverable forward markets during one particularly aggressive intervention session.
Those interventions helped pull the rupee away from record-low levels and signalled that the RBI had become less tolerant of rapid depreciation.
The central bank has also reportedly been active across futures and forward markets in recent weeks as it attempts to reduce excessive currency volatility.
Rupee Has Fallen Sharply in 2026
Despite RBI support, the Indian currency has experienced significant pressure this year.
Reuters reported last week that the rupee had declined by approximately 6.5% against the US dollar in 2026, making it one of the weaker-performing Asian currencies.
Higher crude oil prices, geopolitical tensions, importer demand and changing expectations for global interest rates have all contributed to weakness.
At the same time, strong capital inflows and RBI intervention have prevented more disorderly movements.
What Happens Next?
Currency traders will closely monitor global oil prices, geopolitical developments, corporate dollar demand and signals from the RBI over the coming days.
Month-end payments and derivative expiries could create additional demand for dollars, while continued foreign capital inflows may provide support to the rupee.
The RBI is therefore expected to remain an important presence in the market if volatility increases.
For now, the rupee remains close to ₹95.64-₹95.70 per US dollar, with suspected RBI intervention helping contain losses as India navigates a difficult combination of high energy prices and global uncertainty.
Source – Reuters
Supreme News Network
