Rupee Gains Third Day as Crude Drop Eases Import Cost

The rupee strengthened for a third consecutive session, supported by a decline in crude oil prices that reduces India's import bill, traders said. Brent crude fell about 2% over the period, with the move accelerating after a breakdown toward the 200-day moving average, as detailed in Crude Oil Breakdown Extends Toward 200-Day Moving Average at $74.

India imports roughly 85% of its crude oil. Lower oil cuts the dollar demand from importers that typically weighs on the currency. The rupee had lost about 3% since January before this three-day rebound.

The Reserve Bank of India has been selling dollars in the spot market to slow the rupee's depreciation. A cheaper energy bill reduces the need for such intervention, preserving foreign-currency reserves. India's reserves stood at about $650 billion as of the latest week, down from a peak near $700 billion, two traders said.

Speculative shorts on the rupee have accumulated in recent months. A sustained pullback in oil could force some of those shorts to unwind, adding to the rupee's short-term bounce. The broader trend remains tied to the dollar's strength and foreign portfolio outflows from Indian equities, which have totaled roughly $2 billion so far this quarter.

The next catalysts for the pair are the OPEC+ meeting this week and U.S. inventory data due Wednesday. Traders said a larger crude decline would reinforce the rupee's relief rally, while a reversal above $80 a barrel would test the RBI's resolve again.

For broader context on currency positioning and intervention, see forex market analysis.