The Indian rupee is once again brushing up against the weakest levels it has ever recorded against the US dollar, and the country's central bank has stepped straight into the market to keep the fall from turning into a rout. The Reserve Bank of India has been selling dollars, both in the domestic market and offshore, as a fresh jump in oil prices piled pressure on an already nervous currency. For a country that imports most of its oil, a falling currency and a rising crude bill are a painful combination, and policymakers are pulling several levers at once to contain the damage.
Why the central bank is selling dollars
The RBI's playbook here is straightforward. When the rupee weakens too quickly, the central bank dips into its reserves and sells US dollars to add supply and steady the exchange rate. This time the trigger was crude oil. India imports the bulk of the oil it burns, so every rise in global crude prices means importers need to buy more dollars to pay their bills, which drags the rupee lower. With oil surging and sentiment souring, the currency slid toward an all-time low, prompting the intervention both onshore and in the offshore markets where the rupee also trades.
Trying to pull dollars back into the country
Selling reserves is only one lever. Authorities have also been working to attract more foreign currency into India. They have eased the rules around foreign investment in domestic bonds, making it simpler for overseas money to flow into Indian debt, and they have encouraged non-resident Indians to park dollar deposits at home. The catch is that these steps have not been enough to fully cancel out the two forces pushing the other way: strong demand for dollars from importers and the external strain created by costlier crude. In other words, the incentives are helping at the margin, but the underlying pressure remains.
Where the rupee and bond yields stand
The rupee fell as much as 0.2% to 96.4575 per dollar, closing in on the record low of 96.965 hit in late May. The move rippled into the bond market as well: the benchmark 10-year government bond yield climbed 4 basis points to 6.82%, a sign that borrowing costs are edging up even as the currency struggles. According to live market data, USD/INR is currently near 96.22, down about 0.27% from its previous close of 96.49, and has traded in a 52-week band of 85.86 to 97.05. Momentum readings are middling rather than extreme, with the 14-day RSI around 57 and the pair sitting inside its Bollinger bands, though the longer-term trend still points to a gradually weaker rupee.
A firmer dollar across global markets
The rupee's troubles are unfolding against a backdrop of a broadly resilient US dollar. Sterling held above 1.3450 against the dollar but struggled to build any real upward momentum, with traders still weighing the fallout from weekend hostilities tied to US-Iran tensions and looking ahead to the UK employment report. The euro drifted in a narrow range below 1.1450 as investors stayed cautious over the Middle East crisis, with a European Central Bank interest rate decision also on the calendar. Gold, meanwhile, found its feet and steadied above $4,000 after a bruising previous week, supported by rising geopolitical tension even as a strong dollar and expectations of higher US interest rates capped its gains.
Crypto strength and a cooler US inflation print
In digital assets, Ethereum has been the standout, posting double-digit gains between the prior week and Wednesday and outperforming fellow majors Bitcoin, XRP and Solana before the wider market turned lower on Thursday. Still, some of the metrics beneath that rally suggest the strength is fragile rather than fully convincing. Cardano was quieter, stalling around $0.165 after a modest bounce; its Van Rossem hard fork went live on Saturday, the network's first upgrade approved entirely through onchain governance and the one that ushered in Protocol Version 11, aimed at cutting smart contract costs. On the economic front, US inflation cooled sharply: June's consumer price index fell 0.4% on the month, the biggest one-month drop since April 2020, pulling the annual rate down to 3.5% from 4.2% in May and ending a three-month run of acceleration. Core prices were flat on the month and eased to 2.6% year over year, both softer than expected.
