Our Bureau
Mumbai
The Indian rupee is expected to face renewed pressure after a hawkish shift by the US Federal Reserve strengthened the dollar and raised expectations of a possible interest rate hike later this year. However, domestic support from foreign bond inflows, softer crude oil prices and Reserve Bank of India (RBI) measures helped the currency record its strongest weekly performance in nearly three months.
The rupee ended the week at around ₹94.32 against the US dollar, gaining nearly 0.83% during the week. The currency marked its fourth weekly rise in five weeks as investors increased exposure to Indian assets and global oil prices eased.
The recent recovery came after the RBI introduced steps to encourage foreign currency inflows and improve market conditions. Strong demand for Indian government bonds from overseas investors also supported the rupee by increasing dollar availability in domestic markets.
However, analysts warned that the currency outlook remains uncertain as the US dollar strengthened following the Federal Reserve’s latest policy signals. The Fed kept interest rates unchanged but indicated the possibility of a rate increase later in 2026, prompting investors to move towards dollar assets.
A stronger dollar typically puts pressure on emerging-market currencies, including the rupee, by making dollar-denominated assets more attractive. The shift in US monetary expectations has increased volatility across global currency markets.
Lower crude oil prices have provided relief for India, one of the world’s largest oil importers. A decline in energy costs reduces India’s import bill and helps limit pressure on the current account and the rupee.
While recent gains have improved sentiment around the rupee, experts expect the currency to remain vulnerable to external factors, especially changes in US interest rate expectations.
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