Indian rupee gains to 94.80 against dollar as RBI interventions buffer crude oil shock

The Indian rupee strengthened by 9 paise to 94.80 against the US dollar in early trading on Monday, extending gains after a 2 per cent rally last week that marked its best weekly performance since March.

Active structural interventions by the Reserve Bank of India have stabilized the currency against international pressures. The central bank opened a dedicated foreign exchange window to supply dollars directly to state-run oil refiners from foreign exchange reserves, raised hedging costs for importers on future current-account payments, and increased the cost for banks buying foreign currency for specific transactions.

Forex traders noted that the combined effect of these measures held the dollar-rupee pair firmly below the 95.00 threshold for three consecutive trading sessions, guiding attention toward the 94.80 to 94.70 support band.

Global crude oil prices remain a key factor for currency markets. Brent crude traded around $107.79 per barrel on Monday morning after reaching $110 late last week, driven by security concerns surrounding commercial vessels near the Strait of Hormuz and potential disruptions to Middle Eastern energy infrastructure.

In the fixed-income market, India's benchmark 10-year government bond yield ended Friday at 7.3789 per cent, up 8 basis points over the week. Bond traders expect the benchmark yield to navigate between 7.32 per cent and 7.42 per cent over a holiday-shortened trading week, with markets closed on Tuesday.

Financial analysts point to strong underlying domestic fundamentals providing resilience. Foreign institutional investors turned net equity buyers on Friday, purchasing ₹1,165.92 crore in shares. While global bond yield movements and energy import costs create broader emerging market headwinds, India's reserve pile of $726.027 billion gives monetary authorities significant flexibility to maintain liquidity and smooth external shocks.