The Indian rupee declined to its weakest level in two months on Monday, as oil prices swayed near $90 per barrel amid the West Asia conflict, with markets acutely sensitive to signs of diplomatic efforts to end hostilities.
The rupee's fall could have been steeper if not for dollar-selling intervention by the Reserve Bank of India, via state-run banks, traders said.
The intervention, alongside an afternoon retreat in oil prices, helped the rupee close out the session at 96.4450 per dollar, down nearly 0.2% from its previous close.
Earlier in the day, the currency had touched 96.5250, its weakest level since mid-May.
Brent crude prices retreated from above $90 per barrel after Iran's foreign ministry said negotiations with the U.S. could be pursued based on national interests.
U.S. forces hit Iran for a ninth consecutive day on Monday amid growing concerns over shipping through the Strait of Hormuz after Iran said two oil tankers had exploded and been immobilised.
Asian currencies and stocks were mixed while the dollar index was steady at 100.7.
"Higher energy prices mean that the Federal Reserve will have to remain alert, and in this environment we struggle to see that any investors already owning dollars will be inclined to sell," analysts at ING said in a note.
Markets are currently pricing in about 36 basis points of rate increases by the Fed over the next 12 months. Meanwhile, swap markets in India are pricing about 70 bps of rate hikes by the Reserve Bank of India over the same time frame.
India is the world's third-largest oil importer and consumer and is highly vulnerable to oil price swings, which can upset the economy's growth-inflation balance.
Published on July 20, 2026
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