Indian Rupee Weekly Decline Curbed by RBI Intervention

The Indian rupee weekly decline was limited by frequent dollar-selling interventions from the central bank, even as prolonged uncertainty from the months-long Middle East conflict weighed on the currency, according to Reuters. The rupee closed little changed at 95.4250 per dollar on Friday but fell 0.2% over the week.

Persistent dollar sales by state-run banks, likely acting on behalf of the Reserve Bank of India, kept the currency within a range of less than 30 paisa during the week, offsetting sustained dollar demand from importers, volatile crude prices and the maturity of derivative contracts, Reuters reported.

Oil prices rose after the United States threatened an indefinite naval blockade of Iran, reviving concerns over crude supply. India remains particularly exposed to such disruptions, as it imports about 90% of its oil, according to the report.

Separately, data released Friday showed India's wholesale price inflation rose 9.78% year-on-year in July, easing slightly from June due to lower energy inflation. Earlier in the week, consumer price inflation for July was reported at 4.45%, modestly above the Reserve Bank of India's 4% medium-term target, Reuters reported.

Economists at Barclays said in a note that as inflation increases continue to be driven by food and administered price hikes, they expect the Monetary Policy Committee to look past these higher inflation readings and maintain a pause for the remainder of 2026. The bank said it expects 50 basis points of rate hikes in the first half of 2027.

Elsewhere, regional currencies and stocks traded mixed, while the dollar index slipped 0.2% to 99.7, according to Reuters. The yen strengthened slightly after Reuters reported, citing sources, that the Bank of Japan is set to raise interest rates as soon as September and is considering further rate increases thereafter.