Indian rupee strengthens on firm central bank intervention, oil retreat

MUMBAI: The Indian rupee strengthened modestly on Friday, aided by firm central bank intervention early in the trading session and lower oil prices after US President Donald Trump said he would not attack Iran before next month’s US elections.

Brent crude oil prices declined about 1.5%, helping the rupee rise to 96.61 per dollar, up 0.2% on the day.

The currency faced pressure in early trading, but traders said the central bank likely intervened near 96.80.

The Indian rupee has relied on frequent central bank intervention to avoid testing its record low of 96.96, hit in May.

Pressure on the South Asian currency, the region’s second-worst performer so far in 2026, has persisted as worries about the Iran war keep economic headwinds intact and adversely affect hedging and portfolio flows.

On Friday, two traders described the central bank’s intervention as “slightly heavier than seen in recent sessions,” and likely intended to push back on expectations of persistent depreciation.

“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.

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.

Elsewhere, the dollar index retreated slightly, tracking US bond yields.

Regional stocks and currencies were also stronger, while markets in South Korea and Taiwan, bellwether markets for AI sentiment, were closed for local holidays.