Rupee Hovers Near 96 as Oil Prices and Foreign Outflows Weigh

The Indian rupee opened at 96.20 against the U.S. dollar on Monday (October 5, 2026), then fell slightly to 96.26, marking a 1 paisa decline from its previous close. The rupee's movement was contained within a narrow range, influenced by elevated crude oil prices and sustained foreign fund outflows. The Reserve Bank of India (RBI) intervened periodically to smooth volatility and prevent sharper losses, though the overall macroeconomic environment remained challenging due to high import bills and a strong U.S. dollar.

On Thursday (October 1, 2026), the rupee had slipped below the psychologically significant 96-per-dollar mark, closing at 96.25. Forex and equity markets were closed the following day for Mahatma Gandhi's birth anniversary. Analysts noted that the rupee is trading with an upward bias within the 95.50-96.50 range, driven by oil prices above $100, high U.S. yields, and heavy foreign portfolio selling.

Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, highlighted the RBI's active role in defending the rupee, citing an $18 billion drop in forex reserves to $748 billion. The Monetary Policy Committee is set to meet this week, with economists anticipating a 25-basis-point rate hike to 5.50%. Key triggers for the USD/INR pair include U.S. services data, Fed minutes, and the RBI's decision on Wednesday (October 7, 2026), along with any potential confirmation of damage to Saudi infrastructure.

The Dollar index was trading at 102.47, up 0.54%, while Brent crude fell 0.89% to $101.34 per barrel. Analysts expect continued dollar buying by oil companies and sustained selling by Foreign Institutional Investors (FIIs). On the equity front, the Sensex rose 413 points to 72,315, and the Nifty gained 131.55 points to 22,554.20. FIIs offloaded equities worth ₹9,484.22 crore on Thursday (October 1, 2026). India's forex reserves declined $18.343 billion to $747.557 billion in the week ended September 25, 2026.