Indian Rupee hits 3-month low as Brent crude surges and US bond yields breach 5%
“The rupee has come under renewed pressure today after a sharp rise in domestic and global bond yields. Brent crude remained elevated above $108 levels, adding to India’s import-dollar demand,” said a trader from a private sector bank. The currency traded in a narrow range of 95.96 and 95.75, while dollar demand from oil companies kept the currency under continuous pressure.
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Trader focus will now be on whether the RBI will continue to defend the currency near 95.59-96 levels. A consistent move above 96 per dollar levels leaves the currency open for 96.10-96.20, traders said. “We are forecasting USD/INR at 95.50 by Dec 2026 and 96.50 by June 2027, implying a gradual depreciation in INR and a modest underperformance against other Asian currencies,” said MUFG bank in a note on Tuesday. Focus will now be on oil prices, which will determine the trajectory of the rupee.
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Focus will also be on the US Federal Reserve’s policy decision on Wednesday with markets pricing a 93% chance of a hike, according to CMEs FedWatch Tool.
