Rupee Stabilizes Despite Oil Price Surge Amid Geopolitical Tensions

New Delhi, August 2 - The Indian rupee's decline was limited in July due to capital inflows and support from the Reserve Bank of India (RBI), despite a significant surge in global crude oil prices. Oil prices increased by over 20% in July amid escalating geopolitical tensions in West Asia.

The RBI's measures, combined with strong foreign capital inflows, helped stabilize the rupee, which depreciated by only 0.8% in the month. According to a Bank of Baroda (BoB) research report, foreign portfolio investment (FPI) inflows rose to a 22-month high, driven by stronger equity inflows.

The RBI's special measures attracted USD 40.8 billion in inflows, and the central bank stepped up intervention in the forex market to support the currency. A decline in the US Dollar Index (DXY) by 1.3% during July also provided support to the rupee.