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Indian rupee holds steady as capital inflows offset oil and sanctions risks

The RBI said it accumulated nearly $73 billion since June to support India’s balance of payments, keeping FX reserves near record levels even as oil prices and Iran sanctions risk reaccelerate.

Reported · Written up by our desk · Major Pairs

The Indian rupee (INR) stayed largely steady versus the US dollar on Monday, supported by strong capital inflows as traders weighed potential oil and sanctions-driven volatility. FXStreet notes that pressure on the currency eased temporarily when crude prices dipped, but that outlook could worsen if US Treasury plans for unprecedented sanctions on Iran push oil higher. The report cites severe disruptions to Iranian oil shipments, lower offers to Chinese buyers, and a US naval blockade, alongside heightened geopolitical tensions around the Strait of Hormuz. To cushion the rupee, the Reserve Bank of India is expected to continue active intervention. Over the weekend, the central bank reported accumulating nearly $73 billion under initiatives launched in June to reinforce India’s balance of payments, pushing foreign exchange reserves near record levels. Analysts at MUFG/BTMU also pointed to a shift in the RBI’s stance, saying August monetary policy committee minutes were more hawkish than the earlier policy decision and markets expected. They added that the minutes suggest the RBI is at the end of its easing cycle, with rate moves more likely upward in coming months, while Indian equities began the week slightly higher after prior declines linked to rising crude and higher bond yields.

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