RBI's Relief Proves Short-Lived as Rising Oil Prices Keep the Rupee Under Pressure

24 Jul 2026 , 08:01 PM

Overview

The past week highlighted the challenges facing the Indian Rupee despite repeated intervention by the Reserve Bank of India (RBI). Every attempt by the central bank to stabilise the currency was quickly offset by another surge in crude oil prices, keeping the Rupee close to its all-time low.

Higher crude prices, continued geopolitical tensions in the Middle East and persistent foreign fund outflows remain the biggest risks for the Indian currency.

 

Weekly Timeline

July 20

• The Rupee extended its losing streak for a fifth consecutive session.
• It weakened to 96.4575 per US Dollar, close to its record low of 96.9650.
• RBI intervened in both offshore and onshore currency markets by selling US Dollars.
• Barclays noted that the RBI’s FCNR measures were yet to generate meaningful short-term support.

July 21

• The Rupee snapped its five-day losing streak.
• It appreciated to around 96.24 per US Dollar, recording its strongest session in nearly two weeks.
• Brent crude briefly declined by more than 1%, providing temporary relief.
• RBI announced that its June measures had mobilised $20.72 billion, including $17.4 billion through FCNR(B) deposits.
• Nomura maintained its expectation that total inflows could eventually reach $55 billion.

July 22

• Tuesday’s gains were erased within a single trading session.
• The Rupee weakened sharply to 96.57 per US Dollar.
• Brent crude climbed to around $95 per barrel, supported by escalating tensions between the US and Iran and renewed threats to global shipping routes.
• Oil prices had risen by more than 25% during July, increasing concerns over India’s inflation and current account deficit.
• RBI again sold Dollars through state-run banks to slow the depreciation.
• The Rupee’s 15-day correlation with Brent crude reached 0.9, highlighting the strong relationship between oil prices and the currency.

July 23

• RBI reportedly intervened once again as Brent crude continued its rally.
• The Rupee traded in a narrow range between 96.48 and 96.54, avoiding a fresh record low.
• Brent crude crossed $96 per barrel during Asian trading before continuing its rally.

 

Technical View: Bearish Engulfing Pattern

The USD/INR daily chart reflected the shift in market sentiment.

After the Rupee strengthened on July 21, the following session produced a bearish engulfing candlestick, where Wednesday’s decline completely erased Tuesday’s recovery.

This pattern generally indicates that selling pressure has overwhelmed buying interest and confirms that the broader upward trend in USD/INR remains intact.

 

Brent Crude Continues to Drive the Rupee

The recent rally in Brent crude has become the dominant factor influencing the Rupee.

Earlier in June, Brent had created two major downside price gaps during optimism surrounding a ceasefire. As geopolitical tensions intensified throughout July, crude successfully filled both gaps before continuing its rally.

Current technical observations include:

• Brent has recovered from nearly $70 per barrel in late June.
• Both June price gaps have now been completely filled.
• The next important technical resistance is around $103.50.
• Continued geopolitical tensions could keep upward pressure on crude prices.

Higher oil prices increase India’s import bill, widen the current account deficit and raise demand for US Dollars, placing additional pressure on the Rupee.

 

Why RBI Intervention Has Limited Impact

The RBI has continued to intervene through spot Dollar sales and earlier liquidity measures, but market participants believe these actions are only slowing the Rupee’s decline rather than reversing it.

The central bank is managing volatility while allowing the exchange rate to adjust gradually instead of defending a fixed level.

As long as crude oil remains elevated, intervention alone is unlikely to generate a sustained recovery in the currency.

 

What Investors Should Watch

The Rupee’s direction over the coming sessions will largely depend on three factors:

• Whether Brent crude stabilises or advances towards the $103.50 technical resistance.
• Any further escalation or de-escalation in the US-Iran conflict and its impact on global oil supplies.
• The pace of FCNR inflows during August, which are expected to provide additional Dollar liquidity.

 

Conclusion

The past week’s trading demonstrated that while the RBI has successfully prevented sharp intraday declines, the broader trend remains unchanged. Every period of stability has been followed by renewed pressure from rising crude oil prices.

With Brent continuing to trade at elevated levels and geopolitical risks remaining high, the Rupee is expected to stay close to its record low unless there is a meaningful decline in oil prices or a significant improvement in global risk sentiment.

 

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