RBI Intervention Brings Near-Term Relief for Indian Rupee Amid Ongoing Risks

India's rupee has seen some relief in recent days due to Reserve Bank of India (RBI) intervention and prospective capital inflows. According to MUFG, this has slowed down the rupee's depreciation.

The US Dollar to Indian Rupee exchange rate has eased to around 95.29 after reaching levels above 96.90 during July. Despite gaining 0.78% last month, the USD/INR remains around 6% higher in 2026.

MUFG notes that RBI intervention intensified as the USD/INR approached 96.15, helping the rupee achieve its strongest one-day gain in over a month on July 27. Lower oil prices have also provided support by easing concerns over India's import bill, although MUFG warns that this benefit 'could unwind quickly if crude rebounds'.

Looking ahead to the Reserve Bank of India's August policy meeting, MUFG expects the repo rate to remain at 5.25%. However, they believe risks are tilted towards higher rates later this year as policymakers balance weaker growth against inflation, oil, and monsoon risks.