Indian Rupee Stabilizes as Reserve Bank Intervenes

The Indian rupee strengthened to close at approximately 95.84 per dollar on Tuesday, July 29, 2026. This recovery followed a period of record lows driven by elevated oil prices. The gain was supported by a 3% drop in Brent crude to roughly $85 a barrel and strategic dollar sales by the Reserve Bank of India in onshore spot and offshore markets.

Reserve Bank of India Governor Sanjay Malhotra stated that the currency remains undervalued in both nominal and Real Effective Exchange Rate terms. He attributed the rupee's recent weakness to external pressures, including a strong U.S. dollar and capital outflows from emerging markets, rather than internal economic failures. Malhotra clarified that while the bank intervenes to contain excessive volatility, it does not target a specific exchange rate band.

Despite the stabilization, the currency faces continued headwinds from the U.S.-Iran war. The Islamic Revolutionary Guard Corps recently struck and stopped three oil tankers in the Strait of Hormuz, contributing to oil price instability. Markets are now awaiting a policy meeting by the United States Federal Reserve, where traders expect a potentially hawkish tone due to geopolitical conflicts in West Asia. Following the interest rate decision, analysts expect the rupee to fluctuate between 95 and 96 per dollar.