Rupee Weakens Amid Oil Prices and West Asia Tensions
The Indian rupee opened lower against the US dollar on Monday, pressured by rising crude oil prices and geopolitical instability in West Asia.
The Cliff News | 26 October 2026
The Indian rupee experienced a slight downturn in early trading on Monday, falling 5 paise to settle at 94.98 against the US dollar. The currency's movement was primarily influenced by elevated crude oil prices and heightened geopolitical tensions in West Asia, creating a cautious sentiment in global markets.
Forex traders indicated that the rupee began the trading session on a negative note, reflecting a risk-averse mood globally due to the escalating situation in the Middle East. However, a softening US dollar and lower US treasury yields provided some support, cushioning the rupee's decline.
Market Performance and Influencing Factors
The rupee touched an intraday low of 94.98, marking a 5 paise depreciation from its previous closing level of 94.93. On Friday, October 23, 2026, the rupee had already seen a decline for the second consecutive day, losing 12 paise.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, commented on the market dynamics. "The Indian rupee opened slightly lower on elevated crude oil prices and geopolitical tensions in the Middle East. However, softness in the U.S. Dollar and U.S. treasury yields cushioned the downside," he stated.
"We expect the rupee to trade with a slight negative bias on risk aversion in global markets amid escalation of tensions in the Middle East. Elevated crude oil prices and selling pressure by FIIs may also pressurise the rupee. However, weak U.S Dollar and any fresh intervention by the RBI may support the rupee at lower levels," Mr. Choudhary added.
The dollar index, a measure of the greenback's strength against a basket of six major currencies, was trading down by 0.15% at 101.49. Meanwhile, Brent crude, the global oil benchmark, saw an increase of 1.92%, trading at $114.48 per barrel in futures trade, further contributing to inflationary concerns and pressure on the rupee.
Domestic Equity Market and FII Activity
On the domestic equity front, both the benchmark indices witnessed a decline in early trade. The Sensex dropped 536.30 points to 72,583.86, while the Nifty fell 200.10 points to 22,402.80. This negative sentiment in equities can also impact currency markets.
In terms of foreign investment, Foreign Institutional Investors (FIIs) were net buyers of equities worth ₹887.65 crore on Friday, October 23, 2026, according to exchange data. This inflow, while positive, did not sufficiently offset the broader market pressures on the rupee.
Forex Reserves Trend
Recent data from the Reserve Bank of India (RBI) revealed a decrease in India's foreign exchange reserves. During the week ended October 16, 2026, the forex reserves dropped by $5.011 billion, bringing the total to $721.016 billion. This follows a larger decline of $8.578 billion in the preceding week, when reserves stood at $726.027 billion. The drawdowns in reserves can indicate intervention to support the rupee or other outflows.