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Oil Risk and Dollar Steadiness Trap the Rupee in a Narrow Band
July 10, 2026 at 05:50 AMBy AlphaScala Research DeskSource reporting: The Economic TimesEditorial standards
The rupee stayed between 83.40 and 83.55 as oil held firm and the dollar was flat. The RBI capped the downside. The next catalyst is the RBI's April meeting.
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The Indian rupee ended Monday little changed against the dollar, unable to break out of the tight range that has held for weeks. The currency traded between 83.40 and 83.55, dealers said. A steady greenback and elevated crude prices kept traders cautious.
Oil prices extended recent gains, staying near recent highs on supply constraints. India's dependence on imports means each dollar of higher crude adds to the country's import bill and worsens the current account deficit. The RBI has previously estimated that a $10 rise in crude adds about 0.4 percentage points to the current account deficit as a share of GDP.
The dollar index remained flat against a basket of major currencies. A lack of directional moves in the pair kept the dollar-rupee pair from finding a clear breakout. The rupee's near-term trajectory hinges on the interplay between oil and the greenback, traders said.
The RBI's presence in the market has been a stabilizing force. State-run banks have been selling dollars near the upper end of the range, preventing a slide past 83.60, the currency's all-time low. The central bank has been comfortable letting the rupee drift slowly weaker. It steps in when the move accelerates, dealers said.
Foreign portfolio outflows have added to the pressure. Foreign investors have been net sellers of Indian equities for several sessions, according to exchange data. The selling creates dollar demand, which the RBI has offset with interventions.