Rupee Hits 5-Month Low at 86.78 Against US Dollar
Rupee hits 5-month low – The Indian rupee weakened by 23 paise on Monday, settling at ₹86.78 against the U.S. dollar, its lowest level in five months, as escalating geopolitical tensions in the Middle East and rising crude oil prices dampened investor sentiment.
At the interbank foreign exchange market, the rupee opened at ₹86.75 and witnessed volatile trading, oscillating between ₹86.67 and ₹86.85, before finally closing at ₹86.78 — sharply lower than Friday’s close of ₹86.55. The previous comparable low was recorded on January 13, 2025, when the rupee stood at ₹86.70.
Crude Spike, Equity Sell-Off Add Pressure
The sharp decline came in the wake of a U.S. strike on Iran’s nuclear facilities, which caused oil prices to rise globally. This led to renewed concerns over energy security and import costs, pressuring the rupee.
Brent crude futures were trading marginally higher at $77.07 per barrel, reflecting continued instability in oil markets.
In the domestic equity market, major indices also mirrored the geopolitical nervousness:
- BSE Sensex declined by 511.38 points, closing at 81,896.79
- Nifty 50 dropped 140.50 points, ending at 24,971.90
The fall in domestic equities added to the downward pressure on the rupee, say forex analysts.
Expert Commentary: Rupee’s Limited Recovery
“The rupee dipped to 86.85 in the morning due to rising oil prices, but later bounced back to 86.67 as crude stabilized slightly. However, the currency couldn’t sustain gains due to persistent dollar demand,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP.
He noted that the Reserve Bank of India (RBI) intervened near ₹85.82 levels earlier, limiting volatility and capping further losses.
FII Inflows and Forex Reserves Offer Some Cushion
Despite the rupee’s fall, the Indian economy received some support from foreign institutional investors (FIIs). On Friday, June 20, FIIs made net equity purchases worth ₹7,940.70 crore, according to exchange data.
Additionally, India’s foreign exchange reserves rose by $2.294 billion to reach $698.95 billion for the week ending June 13, according to the latest RBI data. This reserve cushion helps protect the rupee from excessive depreciation.
What Lies Ahead?
The dollar index, which tracks the greenback against a basket of six major currencies, rose 0.60% to 99.29, indicating broad-based dollar strength.
Analysts expect the rupee to trade in a tight band of ₹86.50–₹86.90 in the near term, depending on global oil price movements and further geopolitical developments.
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