Indian rupee ends nearly flat, likely RBI presence blunts hit from higher oil prices

MUMBAI: The Indian rupee ended modestly stronger on Monday, as dollar sales by state-run banks cushioned the pressure from higher oil prices on the currency after the U.S.-Iran talks stalled.

The Indian rupee closed at 94.19, compared with its previous close of 94.2475.

State-run banks offered dollars early in the session, most likely on behalf of the Reserve Bank of India, to limit the currency’s fall, traders said.

That was the trigger for broader dollar-selling interest, offering the rupee breathing room, a trader at a Mumbai-based bank said.

Oil prices jumped almost 3% on Monday, as shipments through the Strait of Hormuz remained limited, keeping global oil supplies tight.

Higher oil prices threaten to slow growth and raise inflation in import-dependent India, while widening the fiscal and current account deficits.

Goldman Sachs analysts raised their oil price forecast over the weekend to $94 per barrel three months later, up from $84 earlier. They have also shaved India’s growth forecast for 2026 to 5.9% from 6.2%.

“We remain cautious, as the prolonged Middle East disruption is likely to keep crude oil and gas prices elevated, and physical supply conditions tight, raising industrial input costs and, if administered, pump prices are adjusted higher, that would weigh on real household income,” they said in a note.

On Monday, a modestly weaker dollar also offered support to the rupee in the latter half of the session. The dollar index was down 0.3% at 98.3 while Asian currencies drifted up, led by the Korean won.

The focus this week will also be on a slew of central bank policy decisions across the U.S., Europe and Japan. While major central banks are expected to keep rates unchanged, investors will parse their commentary about how they see the Iran war impacting their respective economies.