Indian rupee faces pressure from oil, US yields; RBI deputy flags case for gains

MUMBAI: The Indian rupee is set to encounter headwinds on Thursday from a renewed rise in oil prices and a broadly firmer dollar on ​account of growing US rate hike expectations, while central bank intervention is expected ‌to limit losses. The Indian rupee is expected to open around 95. 85-95. 87 per dollar, traders said, down from its close at 95. 74 in the previous session. A stronger-than-expected US purchasing managers’ report overnight fanned new ​price concerns and a poorly received auction of five-year Treasury notes triggered ​a fresh jump in yields. The 10-year US Treasury yield was ⁠up over 15 basis points from its closing level on Tuesday, while five-year ​yields rose above 5% for the first time since 2007. Brent oil prices, meanwhile, reclaimed the $100 per ​barrel mark even as Iran said it remained open to diplomacy to end the US-Iran war, though the two countries remain far apart on ways to do so. “The broader backdrop for Asia ​FX remains challenging, ” analysts at MUFG said in a note. “Currencies with limited exposure to the ​technology cycle and greater vulnerability to higher energy prices could come under renewed pressure. ” Foreign investors have ‌net ⁠sold $3. 5 billion of Indian stocks and bonds so far this month. Fair case for inr appreciation External pressures may have foreign investors looking past strength in India’s economy, a deputy governor at the Reserve Bank of India said in a speech on Wednesday. “The Indian economy ​has done exceptionally ​well. .. (but) there does ⁠remain some disconnect between this real economy narrative and parts of the financial markets, attributable in good measure to the pull ​of short-term returns in competing markets, ” said RBI Deputy Governor Poonam Gupta. “The ​current market ⁠dynamics do not appear especially well-founded. If anything, there seems to be a fair case for the rupee to not just stabilize but perhaps even appreciate from the ⁠current levels, ” ​Gupta said, noting that rupee weakness observed since March ​2025 is a temporary phenomenon. Over recent trading sessions, frequent interventions by the RBI have helped limit the local currency’s ​fall near the 96 handle, traders said.

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