Indian Rupee Hits 96 Mark Amid US Rate Hike

The Indian rupee breached the 96 per US dollar threshold on September 17, 2026, marking its first time crossing that level since July. The currency experienced a seven-session downward trend, closing at 95.95 on September 16 after hitting a four-month low of 95.91 earlier in the week. The decline was driven by a combination of rising Brent crude oil prices, which peaked above $108 per barrel, and a 25 basis point interest rate hike by the US Federal Reserve on September 17—the first such increase in three years.

Geopolitical instability in West Asia intensified the pressure. Drone attacks led the Government of Saudi Arabia to shut its East-West pipeline, while Iranian-backed Houthi rebels targeted Saudi shipping and infrastructure, sparking fears of disrupted exports through the Red Sea and the Strait of Hormuz. These factors, alongside US 10-year Treasury yields breaching 5%, increased safe-haven demand for the dollar and fueled inflation concerns in India.

To combat the volatility, the Reserve Bank of India intervened through state-run banks by selling dollars. While the rupee initially plummeted on Thursday, it later pared some losses following suspected central bank action. Additional pressure emerged as the US House of Representatives passed a bill authorizing President Donald Trump to impose sanctions on Russia and steep tariffs on oil and gas trading partners, including India and China. During this period, foreign portfolio investors withdrew $1.03 billion from Indian markets in a single week.