Indian rupee logs weekly decline, with RBI intervention curbing losses

MUMBAI: The Indian rupee closed the week with losses against the dollar, with frequent dollar-selling interventions by the central bank curbing declines from the prolonged uncertainty from the months-long Middle East conflict.

The Indain rupee ended little changed at 95.4250 per on Friday but fell 0.2% from a week ago.

Persistent dollar sales by state-run banks, most likely on behalf of the Reserve Bank of India, anchored the currency in a less-than-30-paisa range during the week, and blunted the impact of sustained dollar demand from importers, volatile crude prices and the maturity of derivative contracts.

Oil prices rose after the United States threatened an indefinite naval blockade of Iran, reviving concerns about the supply of crude. India is particularly vulnerable to such supply disruptions as it imports about 90% of its oil.

Data on Friday showed that India’s wholesale price inflation rose 9.78% year-on-year in July, easing marginally from June due to lower energy inflation. Earlier in the week, the consumer price gauge for July was reported at 4.45%, modestly higher than the central bank’s 4% medium-term target.

“As increases in inflation continue to be driven by food and administered price increases, we expect the MPC (monetary policy committee) to look through these higher inflation outcomes and persist with a pause for the remainder of 2026,” economists at Barclays said in a note.

The lender expects 50 basis points of hikes in the first half of 2027.

Elsewhere, regional currencies and stocks were trading mixed while the dollar index slipped 0.2% to 99.7.

The yen was a touch stronger after Reuters reported, citing sources, that the Bank of Japan is set to raise interest rates as soon as September and is considering hiking more aggressively thereafter.