Rupee sways with oil and intervention cues, keeping traders light-footed - Reuters

Rupee sways with oil and intervention cues, keeping traders light-footed | Reuters

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Rupee sways with oil and intervention cues, keeping traders light-footed

By Jaspreet Kalra

September 21, 20269:58 PM CDTUpdated 2 hours ago

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!A cashier holds Indian currency notes at a fuel station in Ahmedabad, India, May 20, 2026. REUTERS/Amit Dave

A cashier holds Indian currency notes at a fuel station in Ahmedabad, India, May 20, 2026. REUTERS/Amit Dave Purchase Licensing Rights, opens new tab

MUMBAI, Sept 22 (Reuters) - The Indian rupee swung between modest gains and losses before closing marginally higher on Tuesday, pushed around by ​volatility in oil prices, while likely central bank intervention supported the unit and ‌swap operations drained excess cash.

The rupee rose 0.2% to end at 95.59 per dollar, helped by a 1.5% decline in Brent oil prices to $98.8 per barrel.

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Traders pointed to ​media reports stating that Iran had offered to reopen the Strait ​of Hormuz, a key energy artery, if the US eases military pressure ⁠and lifts its blockade.

Oil prices were higher earlier in the session, weighing ​on the rupee even as dollar sales by state-run banks helped limit ​the currency's fall.

The two-way moves in the currency prompted traders to keep positions small with tight stop-losses, a senior treasury official at a bank said.

"Oil will likely dominate ​the momentum and while a fall past 96 for the rupee seems ​unlikely, it could spur a fresh round of dollar buying if it occurs," the ‌official ⁠added.

Sustained Reserve Bank of India action through bond sales and foreign exchange swaps, and its defence of the rupee have helped more than halve the banking system's liquidity surplus, which was generated by larger-than-expected inflows of $133 billion through the RBI's diaspora ​deposit scheme.

On Tuesday as ​well, the ⁠central bank's spot dollar sales occurred alongside likely sell/buy swaps, which traders said were concentrated in the January 2027 ​maturity.

"In the near-term, priorities will be to manage liquidity, ​gradually ⁠lower the sizeable forwards book, and support the domestic currency," said Radhika Rao, a senior economist at DBS.

Elsewhere, global technology shares got a boost from ⁠a resurgence ​of optimism over AI while attention also ​turned to a high-stakes meeting between US President Donald Trump and Chinese President Xi Jinping ​later this week.

Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala and Janane Venaktraman

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