Indian rupee faces pressure from oil, US yields; RBI deputy flags case for gains

The Indian rupee was expected to open between 95.85 and 95.87 per dollar on Thursday, according to traders, after closing the prior session at 95.74. Business Recorder reported that higher oil prices and a firmer dollar, driven by expectations of more US rate hikes, were set to weigh on the currency, though central bank intervention was seen capping losses.

A purchasing managers' report from the US came in stronger than expected overnight, while a weak bidding round for five-year Treasury notes pushed yields higher. The five-year yield moved past 5%, a level it had not reached since 2007, and the 10-year yield climbed more than 15 basis points from Tuesday's close. Brent crude moved back above $100 a barrel, while Iran said it was still open to talks to end the US-Iran war, though the two sides remain far apart.

In a speech on Wednesday, RBI Deputy Governor Poonam Gupta argued that markets had not caught up with India's economic strength, and said there was solid reasoning for the rupee to hold steady or even strengthen from present levels. She linked the gap to higher short-term returns available elsewhere and called the rupee's slide since March 2025 temporary. Overseas investors have withdrawn a net $3.5 billion this month from Indian equities and bonds, and RBI interventions have kept the rupee from falling much past 96.