Indian rupee sways with oil and intervention cues, keeping traders light-footed

Business Recorder reported that the Indian rupee moved on both sides of Tuesday's session before closing slightly firmer at 95.59 per dollar, up 0.2%. Oil price swings drove choppy trading, while a likely central bank intervention lent support to the unit. Brent crude fell 1.5% to $98.8 a barrel, which helped the rupee, although oil had climbed earlier in the day.

Dealers cited press reports suggesting Iran was willing to restore access through the Strait of Hormuz, a key energy route, should Washington ease its military pressure and remove the blockade. State-run banks sold dollars, which limited the currency's decline during the session. A treasury official with a lender said dealers were limiting exposure by keeping trades modest and placing close stop-loss orders, and he expected oil to keep setting the tone.

The Reserve Bank of India has used bond sales, foreign exchange swaps and spot dollar sales to cut a banking-system cash surplus by more than half, after that surplus had grown on inflows of $133 billion through its diaspora deposit scheme. Traders said the swap operations on Tuesday centred on contracts maturing in January 2027. Radhika Rao, a DBS economist, said the immediate agenda involved managing liquidity, reducing the large forwards book bit by bit, and backing the domestic currency.