The rupee opened 5 paise lower at 94.87 against the US dollar on Wednesday, 9 September, pressured by a further rise in oil prices that is likely to test the Reserve Bank of India’s ability to support the currency.
The Indian currency had its sharpest decline in nearly a month on Tuesday as higher oil prices offset the RBI’s efforts to keep the rupee anchored. The central bank has stepped up its intervention in the foreign exchange market in recent weeks, at times aggressively, helping the rupee recover to a two-month high late last week.
Although the RBI was present in the market on Tuesday, traders said its intervention was not sufficient to prevent the rupee from weakening.
The move marked a shift from recent trading patterns and could indicate that the RBI is becoming less willing to support the rupee aggressively when the underlying pressure stems from higher oil prices, a currency trader at a bank said, according to a Reuters report.
Middle East tensions put oil back in focus
The Middle East conflict has entered its seventh month and continues to widen, with fresh attacks involving Iranian-backed Houthis, US strikes on Iranian oil tankers and new sanctions on Tehran heightening concerns over global crude supplies.
Market experts said the escalation is becoming increasingly significant for India, where higher oil prices can widen the trade deficit, raise inflationary pressures and weigh on the rupee.
Global crude supplies remain under strain, with oil prices approaching the $100-per-barrel mark. Fuel shortages have also emerged in parts of the world, while diesel prices in the US have climbed to record highs. According to experts, crude is no longer merely an energy-market concern but is increasingly becoming a key factor for currency markets as well.
Foreign outflows compound rupee pressure
The pressure on the rupee is also being amplified by continued foreign investor selling.
Foreign equity flows have remained negative in September, with more than ₹12,600 crore withdrawn during the first few trading sessions of the month. This has pushed cumulative foreign equity outflows for 2026 beyond ₹2.37 lakh crore, already surpassing the ₹1.66 lakh crore recorded for the whole of 2025.
Market experts said the combination of higher crude prices, elevated global bond yields and persistent foreign outflows creates a challenging backdrop for the rupee.
“When oil prices rise, global yields climb and foreign flows turn negative simultaneously, the rupee comes under pressure from multiple directions,” experts said, adding that the currency’s near-term trajectory will depend heavily on crude prices, global rate expectations and the intensity of central bank intervention.
Rupee Outlook
Amit Pabari, MD, Research Team, CR Forex Advisors, said the 94.00–94.20 zone remains the key support for USDINR. The pair’s move above the 94.60–94.80 region has strengthened the bullish structure. As FCNR-related support gradually fades and global headwinds persist, USDINR could move towards 95.50 and eventually 96.
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