According to traders cited by Reuters, the Reserve Bank of India likely sold dollars before the local spot market opened, helping the rupee stay above the key 96-per-dollar level. Traders said the intervention came at a time when market liquidity was low, potentially magnifying its impact.
For consumers, the rupee-dollar exchange rate matters directly when making dollar-denominated payments, including overseas travel, education, international subscriptions and other foreign expenses.
At an exchange rate of ₹95.90 per US dollar, $1,000 would translate to ₹95,900. Similarly, a $5,000 payment would amount to ₹4,79,500, while a $10,000 payment would cost ₹9,59,000, before any bank charges, taxes or forex mark-ups.
The impact becomes clearer if the rupee weakens further. At ₹96 per dollar, a $1,000 payment would cost ₹96,000 — ₹100 more than at the current opening rate. A $5,000 payment would cost ₹4.80 lakh, while a $10,000 payment would cost ₹9.60 lakh.
Why is the rupee under pressure?
The rupee is facing pressure from volatile oil prices, higher global bond yields, expectations around US interest rates and weakness in portfolio inflows, even as RBI intervention has helped limit currency volatility.
Brent crude was around $106 per barrel on Friday. Higher oil prices can increase India’s import bill and demand for dollars.
Meanwhile, the 30-year US Treasury yield has risen to its highest level since 2004, while markets are pricing in a near 70% chance of an October US Federal Reserve rate hike, according to the CME FedWatch tool cited in the report. Expectations of higher US rates have also supported the dollar, with the dollar index up nearly 2% so far this month.Markets are also tracking developments around a possible US-Iran truce and its potential impact on oil prices, particularly given the importance of the Strait of Hormuz to global energy flows.
What should consumers watch?
The ₹96-per-dollar mark remains an important level for the rupee. Traders expect RBI intervention to continue to play a role in containing volatility, while the direction of oil prices, US yields, Fed rate expectations and foreign portfolio flows could influence the currency.
ANZ, in a note cited by Reuters, expects the rupee at ₹96.50 per dollar by December and ₹98.30 by the end of next year. These are the bank’s forecasts and not guaranteed exchange-rate levels.
-With Reuters inputs