Rupee Finds Footing as Oil Prices Drop to $78.80

The Indian Rupee has gained ground as oil prices slide, and traders expect the Reserve Bank of India (RBI) to keep interest rates unchanged. The rupee is edging toward 95 per US dollar, a move that could be attributed to Brent oil prices cooling from around $102 a barrel to $78.80. According to Reuters, this decline in oil prices has resulted in a smaller oil import bill for India, reducing the need for dollars in the spot market and easing pressure on USD/INR.

The RBI has been a steady presence in currency markets, intervening against sharp swings, which has helped to calm the situation. In Reuters' poll, 68 of 72 economists expect no rate change from the central bank. The near-term driver for the rupee now seems less like a surprise from the RBI and more dependent on whether oil prices remain contained.