Forex traders said the Reserve Bank of India (RBI) may have intervened to support the currency at lower levels after markets raised the probability of a US Federal Reserve rate hike in September. Higher US Treasury yields and a broad dollar rally also weighed on the rupee.
At the interbank foreign exchange, the rupee opened at ₹95.56 and moved between ₹95.11 and ₹95.56 during the session. It finally settled at ₹95.17 (provisional), up 26 paise from the previous close.
On Friday, the rupee had gained 2 paise to settle at ₹95.43 against the US dollar.
“The Indian rupee staged a stellar two-day comeback to close at its strongest level since August 5, successfully overcoming an early dip triggered by Friday’s surge in the dollar index following hawkish remarks from Fed chair…”
“This resilient recovery was heavily anchored by timely, suspected intervention from the Reserve Bank of India alongside a surge in dollar flows linked to the MSCI rebalancing and the FCNR (B) schemes,” said Dilip Parmar, Senior Research Analyst, HDFC Securities.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading at 99.52, down 0.18%.
Brent crude, the global oil benchmark, was trading 3.70% higher at $91.36 per barrel in futures trade. The rise was driven by renewed Middle East supply concerns after the US strike on Iran’s Larak Island and subsequent Iranian retaliation, raising fresh worries over oil flows through the Strait of Hormuz.
Forex traders said the RBI has been intervening in the market to limit any significant depreciation in the rupee. Better-than-expected inflows under the FCNR(B) scheme also supported investor sentiment.
The RBI’s special USD-INR forex swap facility for FCNR(B) deposits, Overseas Foreign Currency Borrowings (OFCB) and External Commercial Borrowings (ECB) had mobilised foreign exchange inflows of $73 billion as of August 21, 2026, reflecting strong participation from Non-Resident Indians (NRIs). August 31 is the last day for mobilisation of deposits under the RBI’s FCNR(B) scheme.
On the domestic equities market, the Sensex declined 307.24 points to settle at 76,957.27, while the Nifty fell 95.25 points to 24,080.40.
Foreign institutional investors sold equities worth ₹5,039.80 crore on a net basis on Friday, according to exchange data.
India’s forex reserves jumped $12.422 billion to a record high of $729.328 billion during the week ended August 21, the RBI said on Friday.
Meanwhile, the commerce ministry will hold a meeting with industry associations and representatives of export promotion councils on September 1 to discuss India-US trade performance.
The meeting will be chaired by Additional Secretary Darpan Jain, who is also India’s chief negotiator for the India-US bilateral trade agreement.
