Indian rupee firms as central bank intervenes and oil prices retreat

The Indian rupee strengthened modestly on Friday, helped by firm central bank intervention early in the trading session and by lower oil prices. The currency rose 0.2% to 96.61 per dollar after Brent crude oil prices declined about 1.5%.

The rupee came under pressure in early trading, and two traders said the central bank likely intervened near 96.80, describing the move as "slightly heavier than seen in recent sessions," and likely intended to push back on expectations of persistent depreciation. The currency, the region's second-worst performer so far in 2026, has relied on frequent central bank intervention to avoid testing its record low of 96.96, hit in May. Pressure has persisted as worries about the Iran war keep economic headwinds intact and adversely affect hedging and portfolio flows.

Earlier in the week the RBI hiked interest rates for the first time since February 2023 and signalled more were to come. Traders and analysts, however, have said the currency would have benefited from firmer language by the central bank on future rate hikes and the rupee.

"For the INR, the path of least resistance would be a gradual and orderly depreciation that avoids both fuelling speculative spirals and maintaining an excessively rigid exchange rate, while limiting concerns about imported inflation," ANZ said in a note.

The oil retreat came after US President Donald Trump said he would not attack Iran before next month's US elections. The dollar index retreated slightly, tracking US bond yields, and regional stocks and currencies were also stronger, while markets in South Korea and Taiwan, bellwether markets for AI sentiment, were closed for local holidays.