The rupee opened Monday, October 26, at 94.93 against the dollar—a marginal 1 paisa depreciation from Friday’s close of 94.94. But the opening print is less important than the underlying pressure building beneath the surface. Brent crude is trading near $115 a barrel, a six-month high driven by supply concerns in Saudi Arabia. For an economy that imports most of its oil, that number is a direct headwind. Every dollar spent on crude is a dollar not available for other imports or debt servicing, widening the external deficit pressure.
Last week, the currency held a range of 94.32 to 94.97, finding support primarily from foreign institutional investor flows tied to the Jio Platforms IPO. That lifeline is fraying fast. The IPO allotment is scheduled for Monday, with shares listing on Wednesday. A currency trader at a private sector bank noted that the one-off inflow spike associated with the issue is unlikely to recur, leaving the rupee exposed to downside risks without that artificial cushion.
Market participants are now fixated on the 95-per-dollar mark. It’s a psychological barrier, yes, but also a technical level where hedging demand often intensifies. While the RBI’s special window allows oil refiners to meet forex requirements outside the usual market, reducing direct dollar demand, elevated crude prices still drive up hedging costs and weigh on broader foreign portfolio flows. The RBI’s intervention stance remains the key variable to watch if the slide accelerates.
Beyond crude, the US Federal Reserve’s policy decision this week adds another layer of uncertainty. A pause in rate changes is widely expected, but the market is hunting for signals on whether a December hike is still on the table. Any hawkish tilt would strengthen the dollar and tighten capital flows into emerging markets like India. For now, the rupee is caught between sticky oil prices and fading IPO enthusiasm, with the 95 mark looming as the next major test.